Why investors globally invest in Manhattan property
New York is experiencing a real estate bounce back, and everyone wants in on the activity, including investors.
As an investor, if you’re at all interested in the NYC real estate market, there’s one question that keeps coming up – how did the coronavirus impact NYC real estate? But before we go into that, let’s talk about why investors globally chose to invest in Manhattan property.
Major reasons high net worth individuals globally invest in Manhattan are:
- Capital Preservation
New York property is viewed as a safe investment against inflation, economic tension, political fluctuation, and even theft in their home country. High net worth investors work very hard to acquire wealth and they work hard at preserving it as well.
- Diversification
Investors comprehend the diversification theory beyond the business school split of 60% stocks, and 40% bonds. Property in a primary city like Manhattan diversifies their asset portfolio.
Investors who are business owners do not have time to track and withstand the daily oscillations of the stock market so as an alternative, Manhattan property brings peace of mind, and the semi-yearly or yearly price updates they get are predictable.
- As inheritance
Property investment in a primary city is also a way to leave assets to children. Since price appreciation with property is driven by time, investors enjoy knowing property value would increase over time as their children get older.
The COVID-19 on Manhattan property
With a lot of causalities, New York is one of the most seriously impacted states in America with COVID-19, and the pandemic altered the living style of New Yorkers. New York Real Estate is one of the many industries affected by Coronavirus. The property officials didn’t take much attention when the first corona case was reported in NY in early March 2020. But later on, the picture changed entirely; buyers, sellers, and agents all sailed across uncertainty.
The Manhattan, New York residential property market had a terrific year in 2021. However, the mania is slowing in 2022 as mortgage rates almost doubled from a year ago. Higher mortgage rates make it more costly for buyers needing financing, and rates increase because of 40-year high inflation and the Federal Reserve’s tightening policies. Additionally, there are recession fears.
Sales volume for the general condo and coop markets in 2021 was the highest in 32 years due to low mortgage rates, pent-up demand, reopening of the economy and general optimism as more than 70% of New Yorkers were vaccinated. The recovery in Manhattan residential property was very quick.
The Impact of Covid-19 on Manhattan property
In the first quarter of 2020, New York City was hit by COVID-19 at an incredible level and the property market came to a standstill.
The real estate market was locked down from mid-March to the end of June 2020. And as the market reopened by the end of June 2020, skepticism was at its highest. Clients didn’t know how long the recuperation would take, retailers closed down, and restaurants could not reopen for indoor dining.
The rental market was hit much harder. And due to the work-from-home policies at companies, renters didn’t renew leases but instead moved out of Manhattan (during this period, New York City experienced the highest losses — more than 110,000 residents left the city). New Yorkers had a rare chance to work from anywhere they wanted while saving on Manhattan rents. Market rents dropped by 25%, inventory shot up 3x and vacancy rate shot up 5x.
Recovery of Manhattan property From The Pandemic
Despite being one of the cities severely affected by the COVID-19 pandemic, and with the biggest job losses among the country’s central metropolitan areas, NY has been recovering from the economic impacts of the pandemic. Inventory shortages and robust buyer demand continued to drive up home prices, with numerous offers on a limited number of homes being a common event in the majority of market segments.
Post-Covid shutdown (Mar to June 2020), pending sales, indicating the contracts in the pipeline waiting to close, boosted weekly since July 2020 and only began stabilizing around June 2021. The rise in the sales market was spectacular in 2021 and it was pushed by low mortgage rates, pent-up demand, and all-around optimism on the New York economy recovering.
Sales volume began slowing down in the second half of 2022. Majorly because mortgage rates have been increasing, driven by the Federal Reserve’s rate increases. Inflation reached 9.1% in June 2022, a four decades high, and scaled down slightly to 8.5% in July 2022. Recession concerns are everywhere as GDP growth contracted despite strong job improvement and a record low of 3.5% unemployment rate.
The present market dynamics point to a strong advantage for New York City sellers right now. The housing market might be making a move toward normalcy across the country as a result of surging interest rates and a rise in the number of sellers who are listing their homes for sale. However, New York City is very unique in that surging rates do not necessarily impede the demand for housing there.
Is now a good time to invest in Manhattan property?
In 2021 we were in a seller’s market. Now, it’s moving towards neutral. Buyers have the advantage. Prices have recovered considerably from the Covid bottom, and rental yields are high as rents are at record levels.
During the Covid pandemic, prices did fall to a specific degree but the real estate market in Manhattan is now jumping back and is particularly growing in the high-end luxury property market.
Real estate experts know that living in a Manhattan home can be priceless. Having a presence in New York City by buying real estate there is exciting, productive, and unique. Each square foot of land and real estate has enormous value and worth.
Manhattan isn’t solely multicultural in respect to its population, but the actual architecture and buildings that incorporate this city can differ greatly in style. Few residents and buyers prefer the more historical look of the normal New York apartment buildings while some are more impressed by the shine and glamor of the new buildings that offer more current styles of living.
The real estate market in Manhattan is booming and specialists are anticipating that the trend of record sales and contracts will proceed in the coming years.
So, YES, it’s a good time to purchase a Manhattan property now, as we are at the beginning of the next up wave.
Investing in NYC real estate can prove rewarding if you’ve got a clear idea of the essentials. Ready to buy a home in NYC ? – Let’s go ahead together and contact your Damalion expert now.
