Manhattan property COVID 19 buying opportunity

Posted by Wei Min Tan on October 5, 2020

Manhattan property amid COVID 19 presents a buying opportunity for investors.  In Q3’2020, Manhattan apartment sales volume dropped 43 percent.  This is the second largest sales volume drop after Q2’2020, which dropped almost 60 percent.  The below are important points to consider for the global property investor looking to get a deal during this time.

 

 

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Manhattan property sales volume slumped while overall U.S. market very robust

The U.S. property market is doing very well, driven by low inventory and record low mortgage rates.  Business Insider reports that sales of new homes was up 4.8 percent, the second highest since 2006.  Supply of housing stock is at 3.3 months, the lowest since 1963.

 

In the greater New York City metropolitan area, eg New Jersey and Long Island, houses are selling in 2 days with bidding wars!  People want to escape New York City.  Only Manhattan and other major urban areas that are experiencing a slowdown.  Supply of Manhattan condos is at 21.9 months, a 108 percent increase compared to a year ago.

 

 

Investor client’s condo (below) in West Village signed during the Mar – June 2020 COVID lockdown.  We got a good deal in terms of price and terms, which would not have happened during a normal market.

 

 

Rental market is worse than sale market

The historical rental vacancy rate in Manhattan is about 1 percent.  The most recent August 2020 report shows rental vacancy at 5.1 percent!  This is almost 5 times historical average.   Why so high?  It’s because many tenants didn’t renew their leases when expired.  Companies are having work-from-home policies which means employees can work from anywhere.  A lot of tenants moved out of Manhattan temporarily to save on high rents and to take a break from the city.  The supply of rental units in August 2020 was 15,000, representing a 166 percent increase.

 

Weimin’s article, Manhattan property market report

 

 

Price discount at 10.3 percent

Price negotiability has increased to an all time high.  The average discount to asking price was 10.3 percent in Q3’2020.   The resale market is prime for deals.  The new development market, which never used to negotiate, is now offering concessions and price reductions.  We have been negotiating 10 to 15 percent off in new developments, which was unheard of in a normal market.  In the resale market, sellers are even more flexible.

 

 

Cast iron loft building in Soho.  Two weeks ago, I walked around Soho for the first time since the lockdown.  Pleased to see many buildings repainted and upgraded.

When will we return to normal post COVID

In my opinion, Manhattan needs two things to be back to normal.

 

Companies need to reopen so people can go back to the office.  A key missing component in daily Manhattan life is the office people walking around.  This drives retail businesses and restaurants.  When companies have a work-from-home policy, we are missing a key driver – spending and activity from office people.

 

Humans are social animals, and we need interaction with other humans as a basic need.  Working from home saves commute time, of course.  But looking at a laptop on a zoom conference is not satisfactory for the psyche or to maximize productivity.  When you add kids schooling from home and parents having to babysit the kids while doing these zoom calls… you get my point.

 

 

Restaurants have to reopen 100%.  Starting Sept 30, restaurants can reopen to 25 percent capacity.  Meanwhile, outdoor dining, referring to eating outside the restaurants, can continue.  Outdoor dining has been one of the nice things from this.  Feels like in Asia, where people are eating into the night – outdoors.

 

Anyway, restaurants’ business depend on people coming back to Manhattan.  And a big driver of people coming back is offices reopening.

 

 

View from terrace at new development condo which we negotiated post COVID lockdown.  We got good price reduction and concessions from developer.

 

History’s pandemics

National Geographic’s August 2020 issue, Stopping Pandemics,  had a chart on history’s pandemics.  Plague of Justinian (541-588), Black Death (1347-1351), Spanish Flu (1918-1919) were some of the most deadly pandemics.  The chart shows 13 past pandemics, not counting COVID 19.   Cities came back and  people still live in cities.

 

My home, the great city of Manhattan, will come back.  Things will be back to normal a year from now.  Meanwhile, now is a bad time to rent out apartments and rent prices came down 20 to 30 percent.  The sale market dropped and prices dropped.  A year from now, things will be different.

 

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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Related Links:

Strategy: Investing in a full service, high demand building

Strategy: Investing in new development projects

Buying new launch condo in Manhattan

About Wei Min

  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

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About Wei Min


  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

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