The thriving ultra-chic New York City real estate segment

What does seven million dollars get you? Access to the hottest New York City real estate segment; the ultra-high end market. 

This stratospheric sector is on a rockin’ roll with properties “selling for prices not seen since the headiest days of the boom”, The New York Times recently observed.  No flash-in-the-pan, this top-tier phenomenon has endured throughout the global financial downturn.

The latest example is the penthouse apartment at the super-chic One57 skyscraper. Initially listed at $90 million, the sprawling abode recently hiked its asking price to $115 million, as I noted in my last blog. The cheapest units in the luxe structure list for around seven million dollars, the figure at which an apartment graduates from there mere ‘lux’ designation to become ultra-luxury.

True to the age-old aphorism - “a rising tide lifts all boats” – top-of-the-line urban palaces have helped establish New York City as a strong and stable real estate haven in a global economy roiled by uncertainty. The promise of a solid return on a livable (and re-sellable and rentable) investment has lured scores of well-heeled foreign investors to the island. It’s also contributed to a general propping up of mid-priced condos which, at $3 to $5 million each, are also increasing their offering prices. In addition, several current reports point an increase in the number of new mortgage applications, accompanied by a decline in mortgage delinquencies.

In the midst of this scenario, Manhattan’s sky-high prices are fetching record-breaking sums, they’re also solidifying New York City’s reputation (at least, among the wealthiest New Yorkers) as a stable and solid investment site. As one real estate executive understated in the February 10^th Times article, “Most people would say that the top end of the market is bulletproof”.

But that still just the tip of the iceberg, in my opinion. The real benefit from all these new developments is reducible to a single word: confidence. People are beginning to believe the real estate market is headed for recovery.

With conviction comes power. Sheer faith in a real estate resurgence wields a strong-enough force to bring at least some laggard buyers back into the marketplace. They also lure reluctant sellers back. More people take action, prompting a virtuous cycle of sales of increased activity. And that, in turn, generates additional optimism. If we are convinced that feel good times are coming, our ‘as if’ behavior helps generate them.

So while we can’t really predict what will happen, we can look at some basic facts and take heart. And they go like this: Manhattan is among the most desirable places on earth. And its still a small, fully occupied space. With about 22 square miles of land (13.4 miles long and 2.3 miles across at its widest point), real estate on the island really represents a limited time offer, and a rare coveted gem – whether you’re buying thousands of square feet of penthouse views, or a cute little pied a terre.

Who needs gold when you’ve got Manhattan?

10-year assessment of New York City’s property market

Manhattan real estate: Still reaching for the sky

Consider it a towering vote of confidence.

Buyers are snapping up the pricey dwellings at One57, the 90-story apartment building (and hotel) rising above west 57^th street.

Almost a third of these ‘trophy apartments’ have already been sold or are under contract, despite the fact that it’s still 18 months from completion. If the nearly structure’s 11,000-square foot, six bedroom penthouse fetches anywhere near its $115 million dollar asking price, it will be the most expensive New York City apartment sale ever.

Most expensive apartment sale

Nearby, at 15 Central Park West, another recent sale holds the current record. After a mere three weeks on the market, the tower’s $88 million dollar penthouse went to a Russian billionaire seeking a landing pad for daughter, a 22-year old student in Manhattan.

Those are just two of the many recent – and dramatic - signs of New York City’s robust real estate health. Another comes in "The Elliman Report: Manhattan Decade 2002-2011," a 10-year assessment of the city’s property market.

The probe reveals that New York apartment prices increased almost 89 per cent since 2002. Last year, 10,161 properties changed hands, establishing 2011 as the third busiest year real estate sales year of the decade. The 2011 sales represented the most transactions since the 2008 credit crunch. In addition, the listing discount – the difference between the asking and the final sales price - was down to 4.3%, well under the 7.1% of 2010.  

True, the average Manhattan apartment remained on the market 127 days in 2011, eight days longer than during the previous year. But that’s just one day beyond the average market days for 2002.

A solid market

It’s no surprise, then, that the report finds Manhattan real estate remarkably stable “even in the wake of the worst financial period”.

New York City property holds its value, recession or not.

Foreign buyers don’t need to be convinced of that. Roughly 20 per cent of the property deals tracked by Elliman during the first decade of the 21^st Century involved purchasers from outside the United States. These savvy shoppers already knew what their American counterparts are now rediscovering; that few investments can offer both a solid nine per cent return, and a great place to hang your hat.

All this has would-be buyer wondering: Will $115 million for a penthouse apartment with double-height windows and a sweeping Central Park vista look like a bargain in a few years?