Saturday, March 13, 2010

I’ll take Manhattan

WITH the American real estate market still depressed due to the tight control on credit, and the economy in Asia on the up, real estate brokers are setting their sights on property investors in the Far East. Investors from China and India have apparently leapfrogged their way up the list of foreign buyers lately, overtaking Europeans who have stepped on the brakes, say property brokers.

Now is the time, they add, to pick up iconic properties in New York that would never have been put on the market before. Indications are that prices have bottomed out, with transaction prices picking up since the third quarter of 2009.

‘Buyers from China and India are now looking for one-of-a-kind trophy properties in New York City,’ notes Raphael De Niro, who heads a real estate division at Prudential Douglas Elliman. Celebrity watchers may want to note that he is also the son of actor Robert De Niro.

‘Sales volume has gone up since the third quarter of last year, while prices are still about 20 to 25 per cent below their peaks in 2007 and 2008,’ he adds. This combination has created a lot of demand – especially internationally, says Mr De Niro, speaking to BT Weekend in a telephone interview. ‘Coupled with the very weak dollar, this is making buying real estate attractive.’

The luxury market now ranges from US$1,300 per square foot up to US$5,000 psf, for apartments sized anywhere from 400 sq ft to condominiums, townhouses and even historic mansions.

New York City’s real estate will always have its appeal, notes Mr De Niro. ‘This is one of the most important international cities in the world, very similar to London which is the gateway to Europe. NYC is the gateway to North America and South America where you have rising cities like Brazil.’

A big plus for the New York real estate market is the website ( which was launched in 2006. It’s an online listing service that compiles data on the New York real estate market from the perspective of the consumer.

‘Before that, New York was the least transparent city among all cities in the US,’ says Dawn Doherty, Streeteasy’s vice-president of strategic development.

She’s seen an ‘amazing’ number of visits to the site, especially from the Far East. ‘Visits from Japan have doubled, while Hong Kong has tripled,’ she says. ‘People know this city has such real estate value.’

Ms Doherty says the market is still very vibrant, judging by the activity on the site. ‘People are interested to see where this market is going; and the property market here is a free market system – but the problem with the situation in the US is that people are tied in terms of moving forward or up.’

‘There’s a lot of foreign interest these days,’ affirms Paula Del Nunzio, a broker with Brown Harris Stevens who is marketing a historic mansion on Fifth Avenue. The Duke Semans Mansion was built 108 years ago, and is a ‘most important example of Beaux-Arts residential architecture in the city’ – with sides on both East 82 Street and Fifth Ave. Asking price: US$50 million.

The building has only been sold one other time, in 2006, for US$40 million. Buyers will have to judge whether the 20,000 sq ft mansion – which has a doctor’s office in the basement, a five-storey main residence, a penthouse duplex on top, 12 bedrooms, 14 bathrooms, and 11 wood-burning fireplaces – is worth the extra US$10 million mark-up.

Ms Del Nunzio points out however, that another property nearby that’s not as historic nor as well-appointed is listed at US$53 million, and has been bought and sold multiple times.

Foreign investors would be best off buying townhouses and newly built condominiums, and those make up about 20 to 30 per cent of the property market in New York City, says Mr De Niro.

New York City, however, is notorious for its housing co-operatives which make up more than 70 per cent of Manhattan’s private housing stock. Buyers don’t actually own a flat; but shares in a property which entitle them to live in a designated apartment.

But co-op boards can be choosy about their tenants. Even celebrities – singer Carly Simon, actor Michael Douglas, fashion designer Calvin Klein and Madonna – have had their bids rejected in the past. In the 1970s, the disgraced President Richard Nixon had to buy a townhouse as he was deemed undesirable by a co-op. Co-op boards can reject you for any reason – from your clothes to your job, and even more so if you’re going to be an absentee apartment owner.

But that was before the 2008 economic meltdown. These days, co-ops which once would have been less approving of foreign ownership have eased up, reckons Mr De Niro. It’s still not easy to get local loans but otherwise, the barriers have also been lowered for foreign ownership because property laws have eased up a lot, he adds.

Even so, buying direct from developers or private townhouses will be the path of least resistance. Mr De Niro has a US$25 million three-storey penthouse on his ‘for sale’ portfolio.

The 6,400 sq ft Clock Tower penthouse on One Main in Dumbo (which stands for Down Under the Manhattan Bridge Overpass) is on the market for US$25 million – reportedly more than twice the highest price ever paid for a home in Brooklyn, which has always been a lower-cost alternative to Manhattan.

The attractions of the penthouse include 16-foot high ceilings, a central glass elevator and a ‘floating’ staircase with views of Lower Manhattan, the Brooklyn and Manhattan Bridges, and New York Harbour. Oh, and the key to its name: four 15-foot-diameter clock faces as glass windows in each direction on the first level.

‘It’s the first time this unit is on the market, as the crown jewel of a successful condominium project. It was a restoration of a converted office building,’ explains Mr De Niro. The sale is from the developer.

If you’re looking for something slightly less pricey, properties on the Upper East Side can be had for a little over US$10 million. A 5,400 sq ft, five-storey, single-family townhouse with a handsome brick facade – renovated, seven bedrooms, numerous fireplaces, 12 foot high ceilings, and a sweeping staircase – is listed for US$13.95 million.

Linda Melnick, senior vice-president at Stribling associates says she’s seeing foreign interest in high end properties increase by five to seven per cent. ‘The market has stabilised now, and New York real estate is the best place to put your money,’ she says in an email interview. But with the number of transactions going up, she’s also seen prices rise.

So could the window for property investment in New York quickly getting smaller? ‘Stacked up with other cities, it’s still a good window in New York City,’ says Mr De Niro. And some would say, just having an address in New York has a priceless appeal all its own.

Source: Business Times, 13 Mar 2010

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