Archive for January, 2013

The American Advantage

Posted by ricardo on 1/26/2013 | |

 

Unlike its Asian counterparts, Manhattan continues to welcome wealthy investors from overseas. Hong Kong and Singapore have effectively curbed foreign – mostly Chinese – interest by adding ten and 15 percent stamp duty taxes, respectively. France sought, albeit unsuccessfully, to introduce exorbitant new taxes (75% tax) on the upper class, and the rest of Europe is in crisis mode. Chinese investors are seeking safe havens for their wealth, and Manhattan fits the bill.

Miami has also extended an open invitation to foreign investors, particularly those from South American countries such as Colombia, Brazil, Argentina and Venezuela. Uncertain economies and political instability have driven interest in the stable, Portuguese and Spanish-speaking communities in Florida.

As for Canada, foreign investment in cities such as Vancouver and Toronto has led to bubbles in the market. Speculative and overseas buyers drove prices up 100% over fifteen years, and now the market activity is plummeting. Sales have hit ten-year lows, and are now down 23 and 34 percent respectively. It is expected that the bubble will burst this year, or at least deflate by 10-25 percent, as property prices stabilize.

Around the time of the Winter Olympics in 2008, Vancouver, BC was seen as the world’s most livable city for five years in a row. A massive influx of foreign investment flooded the market, and detached houses in the Metro Vancouver area rose to an average of cost $1.1 million. Downtown condos, once eagerly sought after by Hong Kong buyers, soon were selling for $1,000 per square foot. However, a few years later, an Olympian hangover set in and Vancouver soon lost its livability crown, and foreign investment dried up. After a year of plummeting sales, a crash is looming on the horizon.

In Manhattan, luxury real estate has seen an incredible boom in the last few years, and this upward trajectory continues as quickly as new luxuriant skyscrapers stack higher and higher to keep up with the growing demand. 57th Street is now a monument to exclusivity and luxury. The hottest address on the planet keeps growing, upward and outward, but there is only so much space left for those who want a piece of the best for their very own. Miami has seen estates fetch record-high prices in 2012, and extravagant projects abandoned during the economic downturn have picked up steam once again.

While the rest of the world wrestles with uncertainty, or keeps its borders shut to outside investment, the United States continues to lift its lamp beside the golden door for all those who wish to own a piece of the American Dream.

 

For More Reading:

 

Canadian Real Estate Crash of 2013

Hong Kong Stamp Tax

Rich Tax Averted

Old Money’s New Rules

Posted by ricardo on 1/25/2013 | |

One look down West 57th Street and it is easy to see how Manhattan is quickly becoming an ultra-modern metropolis, with tall, narrow glass towers more akin to Cloud Atlas than the old-world European charm from which New York was formed. While the dazzling skyscrapers of staggering heights have served to attract billionaire investors for the world over, some neighborhoods are less than welcoming to the new look of the city.

The Upper East Side of New York has always had a rich past, from the Roosevelts to the Rockefellers, to the Astons. The old money inhabitants that remain have no desire to change with the times, and would very much prefer to maintain the status quo, no matter the price.

At One57, two suites have already sold for $95 million apiece. The sleek Shard down the street will be over fifty stories high, yet thin enough to stand in a lot built for two townhouses. The average price tag is expected to exceed $20 million. These swaying glass palaces have no place amidst the heritage homes of the Upper East Side, or so say its current tenants.

One of the most outspoken against the encroaching modernity is none other than novelist Tom Wolfe. When Aby Rosen attempted to erect a 30-story glass tower at 980 Madison Avenue, Mr. Wolfe ran straight to the Landmarks Preservation Commission, which put the brakes on the project, much to the developer’s chagrin.

According to the locals, out-of-place modern buildings have met with more market resistance than their classic limestone counterparts. Glass apartments at 949 Park Avenue sold 27 percent below asking prices. At 1055 Park Avenue, modern style homes closed for 30 percent to 40 percent below asking. Meanwhile, buildings with traditional architecture matching the neighborhood have sold out almost instantly.

New York is no stranger to architectural controversy. In 1915,the 38-story Equitable Building produced an oppressive amount of shade. The building was said to “cast a noonday shadow four blocks long”which effectively deprived neighboring properties of sunlight. This gave rise to the 1916 Zoning Resolution that required setbacks in new buildings, and restricted towers to a percentage of lot size, to allow sunlight to reach the streets below. Today, with buildings such as One Madison Avenue and 107 West 57th Avenue, these height-to-width restrictions have gone out the window.

New York City has always been synonymous with progress and modernity. The architecture of the city is said to be most closely associated with the skyscraper. Therefore, it is not without its irony that the old money of progress is trying to suppress the new wealth of the same intention.

For further reading:

Architecture of New York City

Old Money in the Upper East Side

The Skinny on the Manhattan Skyline

57 Street: Manhattan’s New Gold Coast 

Upper East Side Real Estate for Sale

 

57th Street: Manhattan’s New Gold Coast

Posted by ricardo on 1/23/2013 | |


It is hard to imagine a location more sought after than 57th Street in Manhattan.  Everyone knows that the intersection of 5th Avenue & 57th Street has long been the epicenter of luxury. That epicenter has now extended along 57th Street.  Billionaires from around the world have taken interest in the prestigious new glass towers peppering the New York skyline and have been anonymously placing bids on the soon-to-be completed condos for upwards of $90 million. Why has this location become so popular? Well, 57th Street in New York has long been home to well-deserved international prestige: the world’s best views of Central Park, unparalleled shopping along 5th Avenue, and the proximity to the most affluent and influential people in the world.

With its 90th floor 10,920 sq. ft penthouse asking a record-breaking $115 million, One57, at Sixth Avenue, has paved the way for new opulent development across what is now known as the Billionaires’ Belt. In quick succession, one behemoth after another followed the 1005-foot leader’s suit. Now, developers intent on fashionably skinny towers have sought out every available lot to build mammoth 50-plus to 90-plus story buildings for those wealthy enough to afford their eight-digit price tags.  57th Street wasn’t always this way. Before being known as the Billionaires’ Belt, it was a busy but unassuming street, one removed from the horse-drawn carriages across from the prestigious park-side addresses.  The neighborhood is now changing fast.

On the heels of creating One57, Extell’s Gary Barnett has already planned an 88-story giant for the Broadway intersection at 225 West 57th.  Expected to be over 1,550 feet tall and featuring Nordstrom’s NYC flagship in its base, 225 West 57th St. will break all height records and is destined to be one of Manhattan’s icons.

57th Street has also caught the eye of renowned property moguls such as Michael Stern and Barry Sternlicht, who intend to build a 700-foot luxury apartment tower from a mere 43-foot base. Their development at 107 West 57th is but one of the so-called “skinny towers” planned for the neighborhood. Staggering, pencil-thin apartments such as One57, 250 East 57th and One Madison Park have now become the norm. Despite the narrow proportions the avenue allows, views at West 57th demand an average of $20 million dollars. Tenants at the NYC “Shard” will enjoy a whole floor, and sometimes more, to themselves. In fact there are more duplexes than simplexes in the building, with a ratio of 14 to 13.

Even the far west side of 57th St. has an avant-garde rental building slated for 625 West 57th, brought to us by the Durst The Durst Organization.

The East side of 57th Street is also seeing its share of luxury and ultra luxury development.  The recent addition of the super-tall 432 Park Avenue (by Macklowe) to one of the areas most exclusive neighborhoods (between Park and Madison, across from the Four Seasons Hotel). You just can’t have a better location for an ultra-luxury tower like 432 Park. . This gorgeous tower will be close to 1,400 feet tall with the top floor slated at $85 million and high full floors in the $60 to $70 million range.

Farther afield, at Second Avenue is a 57-story tower is in the works at 250 East 57th.  While not an ultra luxury tower like some of the others, this architecturally interesting building by World Wide Group will be a great addition to Midtown East.

These new premium developments have earned this area the moniker “Manhattan’s Gold Coast.”  The popularity of 57th Street is fueled, ironically, by its own popularity. Like a perpetual motion machine, hype builds on hype, until no other street can compare. The desire to own the best real estate in the world drives the world’s elite. The highest priced properties are created by the interest of billionaires. Developers know of this Möbius strip, yet there is only so much space, and so little time, to make a home on the Billionaires’ Belt.

For further reading:


Forbes Tours One 57 Sales Office

The Skinny on the Manhattan Skyline

New York Observer

 

Q4 2012 Manhattan Market Report Highlights

Posted by ricardo on 1/17/2013 | |

 

High demand, stable or moderately rising prices and plummeting inventory have characterized the Manhattan real estate market for Q4 2012. Inventory dropped by 37% to a 12-year low. The lack of additional new development inventory combined with high demand for Manhattan condos, has led to a dearth of properties available for sale, especially in new developments. Basic economics suggests that these factors will lead to price appreciation in the near term. The trend of low inventory, however, is expected to continue for some time.

As for the Luxury Market, we have seen a significant increase in activity in Q4 2012 as sellers moved to close deals before the rise in capital gains tax that went into affect on January 1st, 2013. Ultimately, I am sure everyone is happy that the capital gains rate only increased from 15% to 20%. We expect to see a decline in activity for Q1 2013 as activity as a result of this frontloading.

 

For further reading:

Q4 2012 Manhattan Market Report