Manhattan Luxury Property Market, What Does It Mean?
Posted by Wei Min Tan on February 16, 2021
The Manhattan, New York luxury property market is a loosely used term. This is partly because the media likes to report sales of $20 million to $100 million apartments, those that are selling for $5,000 per sqft or more. Here, allow me to add some context.
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Manhattan luxury apartment, what does it mean?
Generally, a luxury building will have full service staff, very nice finishings and amenities including fitness center, residents’ lounge, roof deck, even a pool. Most of the buildings built after 2006 are luxury because developers needed to sell a higher priced product to cover the higher development costs. Most of our clients invest in luxury buildings. When renting out, the amenities are wow factors to attract tenants.
The lobby of a luxury building is beautiful with expensive tiles, high ceilings and an overall sense of exclusivity. Within the condo unit, the distinction of a luxury apartment lies in the kitchen and bathroom.
The kitchen will have nice wall tile such as marble and high end fixtures from makers such as Hangrohe and Waterworks. The kitchen would have appliances from Subzero, Viking or Gaggenau. For context, a fridge from Subzero costs about $10,000 to $15,000. While a regular fridge from GE costs about $1,000. A thick marble countertop is another common element in a luxury kitchen.
Weimin’s article, Want to invest in a second home in Manhattan?
60 stories above Manhattan in one of the Billionaire’s Row luxury properties, looking down to Central Park.
What does non-luxury mean?
Non-luxury property in Manhattan will have a doorman and elevator but not amenities such as a fitness center, residents’ lounge, roof deck, and high end interior appliances and finishings. Most were built from 1960s to 1980s. In the current market, they are trading at around $1,000 to $1,500 per sqft depending on location.
Luxury property price points
Luxury price points start at around $1,900 per sqft all the way to $10,000 per sqft. But anything above $5,000 per sqft I would deem as ultra luxury property and have their own set of characteristics.
Price per sqft is a good way to differentiate building quality types because this removes the element of property size. eg a 3,000 sqft apartment costing $4.5 million is less luxurious than a 2,000sqft apartment costing $4.5 million. The former is $1,500 per sqft while the latter is $2,250 per sqft.
If we define luxury as the top 10 percent of transactions, then the price per sqft is about $2,600. The average sale price of this top 10 percent is $7.5 million. For context, the average condo price per sqft is $1,900 with an average sale price of $2.7 million.
Weimin’s article, Buying a townhouse or landed property in Manhattan
Luxury property as investment to rent out
Most of our clients invest in luxury apartments when the objective is renting out. While price is higher than non-luxury property, the rents commanded by luxury properties are higher as well. The bottom line is that the rental return for luxury property is higher than non-luxury.
Luxury apartment’s high end appliances and stone countertop, blending seamlessly.
Luxury as a primary residence or second home
For those buying as residence or second home, almost all our clients prefer luxury property assuming the budget fits. However, certain features may only come in non-luxury properties. For example, a large 500 sqft terrace. These large terraces are more common and less expensive in Coops than in high end condos.
In conclusion, don’t think luxury only refers to $20 million apartments that you hear in the news. Those are less than 0.5 percent of transactions. Luxury in general refers to nice finishings and amenities. These are appealing and help a lot when the objective is property price appreciation and ease of renting out.
Weimin’s article, Investing in a Manhattan penthouse apartment
What We Do
We focus on global investors buying Manhattan 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
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