Investing in Brooklyn property for asset diversification
Posted by Wei Min Tan on February 22, 2021
Investing in Brooklyn property is a strategy our investor clients take to benefit from the better price value compared to Manhattan. However, it depends on the area within Brooklyn. Certain neighborhoods in Brooklyn could be more expensive than Manhattan. Brooklyn is the most populous borough of New York City with 2.6 million people out of New York City’s 8.6 million. Brooklyn has developed a global reputation. It’s common to see kids in Asia wearing T-shirts or caps with “Brooklyn” on it. Brooklyn is mentioned in countless songs and is associated with character and coolness.
While people commonly refer to Brooklyn as if it’s one neighborhood, Brooklyn comprises many different neighborhoods, each with its own personality and character. Brooklyn Heights, DUMBO, Boerum Hill, Park Slope, Red Hook, Williamsburg are just a few of the diverse number of neighborhoods in Brooklyn. Brooklyn has its share of new launch condo properties and for the investor, prices are generally a better value compared to Manhattan. The question is rental yield and speed of renting out.
Brooklyn Heights premium
Brooklyn Heights is known for townhouses, tree-lined streets, cafes and proximity to the water. It was the first suburb of Manhattan. Prices are at a premium and demand is high. The Brooklyn Heights Promenade, with its dramatic views of Manhattan’s skyline, is in Brooklyn Heights. One Clinton and Quay Tower are two new launch condo developments. Meanwhile, Pierhouse at Brooklyn Bridge Park was completed a few years ago and located right by the waterfront and next to the new and very cool 1 Brookyn Hotel.
There is definitely strong demand for a condo in Brooklyn Heights despite prices being close to Manhattan’s. The waterfront condos are selling at a premium and inventory is low. But it still depends on choosing the right development. Some do better than others and sometimes the reasons could be hard to explain as well. Brooklyn Bridge Park and the ferry to Manhattan are amenities that make this neighborhood attractive.
One Clinton is a successful new launch property in Brooklyn Heights.
Brooklyn Heights Promenade has one of the best views of Manhattan.
Downtown Brooklyn and new condo developments
Downtown Brooklyn has so many things going on and residential condo developments everywhere. There is a new Trader Joe’s, Whole Foods, ample new restaurants. Dekalb Market, Borough Hall, Cadman Plaza Park and Metrotech are in Downtown Brooklyn. Proximity to the subway lines is a key benefit as all the subway lines meet here.
New launch property Brooklyn Point is a new Extell development with an amazing tax abatement program and perhaps the most comprehensive amenities of all of Extell’s projects. 11Hoyt is another new development on an elevated level off the streets. At 11Hoyt, two-bedrooms at $1.5 million are about 50% less than similar quality condos in Manhattan.
Deal example: Investor client bought this new launch condo in Tribeca. Located opposite Goldman Sachs’ headquarters. Booked at pre-construction stage, prices went up significantly after completion.
DUMBO, tech hub with commensurate property prices
DUMBO is also one subway stop from Manhattan. DUMBO’s distinctive features are the lofts converted to residential condos, cobblestone streets and Empire Stores, an entertainment and shopping destination. DUMBO has become a hub for technology companies in recent years and prices increased commensurately.
1 John Street is a waterfront condo commanding premium prices and rents. Perhaps my favorite building in DUMBO. 1 Main Street is the famous Clock Tower, a prewar condo with low carrying costs and the most central DUMBO location. There are several new residential developments such as 98 Front which has smaller sized units, and Front and York, which takes up an entire block.
Investing in Boerum Hill and Park Slope to rent out
Boerum Hill is a small, tree-lined neighborhood with townhouses and brownstones. A few new developments are coming up in the area. For our investor clients looking to buy and rent out, we recently analyzed the rental and sale supply of the area. Supply of both are surprisingly low. A two bedroom new development condo in Boerum Hill costs about $1.5 million and rents for $5,500. A similar property in Manhattan could cost about double at $3 million with rental potential of $8,500.
New launch property Saint Marks Place in Boerum Hill, Brooklyn.
Park Slope is a larger neighborhood compared to Boerum Hill. Both are desirable because of the neighborhood feel, many independent small shops, trees, small buildings. Park Slope is close to Prospect Park, which is Brooklyn’s Central Park. Most property inventory are Coops or small multifamily buildings with 4 to 6 units. However, there has been many new developments built within the past 10 years. Rental supply is low in Park Slope so investing in a strategically located two-bedroom condo is a viable strategy.
Property investment in Brooklyn
The above are just some of Brooklyn’s diverse neighborhoods and new condo projects. Investing in Brooklyn property is definitely a viable strategy provided the condos are selected well to benefit from long term appreciation. We have represented clients buying condos and townhouses in this cool NYC borough. The key drivers for investing in Brooklyn property remains the same as in Manhattan – proximity to transportation, demand vs supply, rental and appreciation potential.
Weimin’s article, What is a New York Luxury Property
What We Do
We focus on global investors buying New York condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
Article updated Feb 22, 202
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