New York City


New York City construction numbers are at historic lows indicating a potential opportunity for real estate investors

The number of construction permits for new housing in New York that have been issued so far is one of the lowest number recorded. During the first two years in the current decade (2010 and 2011), New York City issued only 15,663 new housing permits. At this rate, this decade will only create 78,315 new housing units; which would mean the lowest number of housing since the 1990s.

Below are the details of permits issued over the last decades::
• In the 1960’s, NYC issued permits for 368,700 new housing units.
• From the 1970s through the 1990s, permits for new housing units declined steadily and fell to a very low of 70,204 units in the 1990s.
• From 2000 until 2009, New York City issued a significant increase in housing permits; namely a total of 231,228 permits.
• Based on the first 2 years of this decade (2010 and 2011), the number of new housing units is estimated to be 78,315 in this decade

While we cannot forecast accurately the number of permits that will be issued in the remainder of this decade, it is unlikely that developers will have access to sufficient capital soon to start a construction boom. However, there are some factors that could produce a more favorable future for housing construction. New York continues to see its population grow and the recent pick up in sales data indicates that New York is and remains a safe and attractive investment for high-income households.. Also, the steady increase in rent for residential units and the lack of inventory could be a catalyst for new housing construction.

Q3 Manhattan report – real estate sales and prices are flat

Based on the Q3 Manhattan real estate reports, sales in Manhattan are flat and prices are stable.

Inventory is at its lowest level since 2005 with approximately 7000 listings. Based on Corcoran, a large real estate brokerage firm in New York, resale condo prices increased 1% year over year while the median price of new condo developments increased 18%. (Foreign investors typically purchase condo apartments - and not Coop apartments which require extensive applications, background checks and Board approvals)

Renting a townhouse in Manhattan for 150000 USD per month

An Upper East side townhouse is being offered for rent for 150000 USD per month. The house has 10 bedrooms, 11.5 bathrooms and 3 kitchens. The house was first listed in March 2011 for 210000 USD per month but now the owners have reduced the asking price.

The townhouse has neo-French Renaissance style and was built in 1916. The building has 8 working fireplaces, a 50 person dining room and a library. The 4th-floor master bedroom has not one, but two sitting rooms.






Source: Business Insider

One57 – ultra-luxury in Manhattan real estate market

One57 will become the tallest residential condo tower in Manhattan with sweeping views on Central Park. One57 belongs to the ultra-luxury market and an ultra-private clientele. Apartments are on sale and are being sold for record highs. An 11000 square feet duplex of the building was sold for 95 million USD in March this year. There are currently fewer than 40 apartments left for sale of the 92 apartments. Apartments that take the entire floor are being sold at a minimum of 50MM USD each.
The building is located along the south end of Central Park will have glorious views on Central Park to the north and downtown Manhattan with Freedom Tower and Statue of Liberty to the south. One57 has at least a two-year head start on newer developments that are targeting the ultra-luxury buyers. For example, 432 Park Avenue, a building which is expected to be even taller than One57 will only be completed in 2016.



Source: New York Times, Sept 19 2012

Ultra-luxury condo in Manhattan demands 192% price increase

15 Central Park West is an ultra-luxury condominium building in New York and is setting new standards of ownership of exclusive apartments in Manhattan. This year, several apartments in this building have been listed on the market with asking prices at an average 192 percent premium over what their owners paid in 2007 and 2008. For example, a five-bedroom unit has an asking price of 95 million USD.
The building is home to many Chief Executives and Hollywood stars and is one of the most desired trophy buildings in the city. The building has a swimming pool, movie theatre and dining room.
A brand new luxury tower, called "One57", is currently being constructed and will emerge as a competitor to the 15 Central Park West building. Units of the building are already being sold at ultra-luxury prices.






Source: Bloomberg, August 2012

US property prices begin to increase

According the National Association of Realtors (NAR), the median price of US properties in Q2 2012 experienced the greatest year-on-year increase since 2006. However, this is still about 20% under the record median price set in 2006. NAR chief economist Lawrence Yun mentioned that US real estate prices are set to increase in even more markets during upcoming quarters. He said: "It's most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing home owners. "Inventory has been trending down and home builders are still under producing in relation to growing demand. Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight,' he added.

Source: Property Wire, August 2012

Saving taxes when buying US property

The number of international investors buying US property is rapidly increasing. However, these buyers need to be aware of the tax implications of their purchase. When international buyers later sell their US houses, they will have to pay 10% tax on the gross sale proceeds of the sale. This is the based on the Foreign Investment in Real Property Tax Act ("FIRPTA"). The tax will be withheld at closing.

There might be ways to defer/avoid the real estate taxes. A real estate lawyer is the best person to contact in order to get a better understanding. The structure of a trust is often used in these international transactions and below is a simple overview of the process:

- Prior to the purchase of U.S. real estate, the international investor should set up a U.S. trust, with a U.S. trustee, properly established and with an IRS taxpayer number for that trust.

- The trust will buy the US property. The deed should be written in the name of the trustee. As a result, the trust is the owner of the property

- At some point in the future, the trust will sell the property and will have to pay capital gains tax on the net capital gains earned

- The trust will distribute the net proceeds (after paying capital gains tax) of the sale to the beneficiary of the trust. (The international investor is the beneficiary of the trust.)

Source: Rubinstein & Rubinstein, LLP August 1 2012 (

Real estate taxes: comparing London with New York

Buying a luxury property in New York might just be getting a bit cheaper, at least compared to buying a similar property in London. Based on Knight Frank, a property consulting firm in London, buying a New York property with a value over USD 3.1 million will only cost you half as much in transaction taxes as buying a house in London.
Over the last few months, that tax difference has further widened in advantage of a New York property. The British tax authority has increased the stamp-duty tax from 5 percent to 7 percent of the purchase price. Using an offshore company will not help (and actually result in higher taxes). Furthermore, foreigners, for the first time, will also have to pay capital gains taxes when they sell their British properties.
One other factor to consider is the confidentiality factor, or rather the challenge and costs with keeping confidentiality.
It remains to be seen whether any more tax might hit buyers of US real estate property. Already New York has a “mansion tax” on purchases of property over USD 1 million. There are no other serious discussion to increase real estate taxes further at this point in time.
“Culturally we are more comfortable with foreign ownership,” said James M. Carolan, a real estate lawyer in New York, “and that has buoyed our economy in New York. There is a lot of money looking for a safe harbor, and we look like a safe harbor to the rest of the world.”

Source: New York Times, August 2012

Penthouse in New York listed for 100MM USD

One of the most exclusive apartments in New York has been listed on the market. An 8000 square foot (743 square meters) penthouse is located on West 56th street. It has wraparound terraces and has stunning views on entire Manhattan. The apartment has 3 floors of living space (73-75th floor), private elevator, six bedrooms and nine bathrooms.

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The apartment is located in CitySpire, a building that created controversy when it was constructed in 1988 because the developer built it higher than zoning codes allowed. The city reached a settlement with the developer.
The current owner of the penthouse is a real estate developer (Steven Klar) who purchased it for 4.5MM USD in 1993.

Year over year growth in construction permits in Manhattan but still 58% lower than in 2008

Based on US Census data, there was an increase of 39.4% in construction permits for new residential units in New York City compared to last year. However, this is still a decline of 58% compared with 2008. At the peak of the real estate market in 2008, 9723 construction permits were granted.
The number of permits issued for new housing has been different in each neighbourhood. In Manhattan, 1422 permits were issued. Brooklyn issued 774 permits and Queens issued 735 permits

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