Manhattan property performance 2018
Posted by Wei Min Tan on March 18, 2019
Overall Manhattan Market (Condos and Coops)
The Miller Samuel/Elliman 4Q’2018 report shows that Manhattan property’s 2018 performance experienced a 14 percent drop in sales volume. Inventory levels in Q4’2018 increased 12 percent. Number of sales for Q4 was 7 percent below the 10-year fourth quarter average.
Reasons include an oversupply of high end apartments, the new tax law which limited tax deductibility of mortgage interest, slowing global economies which reduced foreign buyers, rising interest rates and a stock market that almost reached bear market territory the end of 2018. We had an up cycle from 2010 to 2017. That ended in 2018.
Median price of an apartment is now below $1 million, at $999,000, a 6 percent drop compared to a year ago. Investors have been coming in, represented by all-cash transactions rising to 55.4 percent, the highest in the last 5 years.
This data represents the “overall” market which includes both condominiums and cooperatives, the ratio of which is about 1:2 (one third are condos, two-thirds are coops).
The Condominium Market
Specific to the condo market, sales volume in Q4 dropped 13 percent, listing inventory increased by 3 percent while listing discount increased to 6.7 percent. Median price was $1.479 million, down 9.5 percent. All indications of a soft market with high supply and more negotiability.
However, price per sqft increased by 9.5 percent to $2,152 per sqft. Average sales price also increased by 12 percent to $2.96 million.
Many new developments pulled back inventory. Sales levels of new developments decreased by 32 percent.
2019 Outlook
The slowdown should continue in 2019 although may predict the hard hits have been absorbed in 2018. At new developments, we are seeing developers giving in to concessions such as paying for transfer taxes and credits, which never happened during the up cycle.
The summary is, this is the best time to be a buyer but a terrible time to be a seller in Manhattan.
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
Deal Examples
1) The Sutton, 959 First Ave, Midtown East. Toll Brothers development, required only 10 percent reservation deposit. Represented multiple buyers at the $2 million price point who booked respective units at pre-construction stage. Project took 2 years to complete. Location and luxury finishes make this a good investment. Close to United Nations, Citigroup Center, Blackstone, Blackrock. Rented at premium rents from the beginning.
2) 200 Chambers Street, Tribeca. Luxury building in Tribeca commanding premium price and premium rents. This unit on the 7th floor has gorgeous view of the Hudson River to the west. Purchased at around $1.4 million, rented out immediately after closing of the sale.
3) Parc Vendome, Midtown West. Value buy but required renovation. The buying decision based on south exposure with plenty of sunlight and proximity to Central Park. Totally renovated the apartment after the closing. Before/After photos below. Rented immediately after the renovation was completed.
Notes:
Article updated to include deal examples on March 18, 2019
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