HIGH END: What The Brokers/Managers Are Seeing...

Posted by urbandigs

Thu Apr 14th, 2011 09:21 AM

A: Manhattan's high-end market is performing quite well right now, as evidenced by UrbanDigs' Pending Sales $5M+ charts. That is the chart that tracks the # of properties with an asking price over $5M+ that move from an ACTIVE to a CONTRACT SIGNED state and are awaiting closing. The metric goes through the proprietary UrbanDigs cleansing process to ensure accurate counting. I want to show you how this 'price point' is performing relative to the broader Manhattan market, and share some thoughts that were given to me from brokers and managers I know well and trust.

managers-agents-manhattan-real-estate.jpgFirst, the chart! Then we will get to what these agents/managers are seeing out there in the field.

MANHATTAN PENDING SALES vs PENDING SALES $5M+

manhattan5m+.jpg

The data doesn't lie and if you track the data itself rather than what you 'think' is going on out there, you will always get a much more accurate interpretation on current market trends. Even though some brokers think they 'are' the market, the reality is the market does what the market wants when the market wants to do it! It's possible the market is strong, even though a broker's personal business is slow; and vice versa. So, look to the data to quantify any trends!

I did close a deal that was counted in this measure a month ago, but as of now I have no $5M+ outstanding deals. So even though I'm not seeing activity in this segment of the Manhattan marketplace right now, by reading the chart I know this price point is on fire right now. Here are some opinions on the $5M+ market from across the Manhattan real estate industry:

RAPHAEL DENIRO (The DeNiro Group @ Douglas Elliman)

"I'm seeing well priced, turn key properties, move very quickly. Particularly full service buildings in "A" locations. Mostly "all cash" deals. The only thing that matters in Manhattan high end real estate is, how the DJIA is doing on a given week, despite whatever is happening in Japan, Southern Europe, or the rest of the U.S."
My comment: Given the fed engineered reflation in all asset classes, equities, commodities and HY/IG bond markets alike, there is a ton of wealth that was created as investors search for yield. It does not surprise me to see winners in these tradable markets put money to work into Manhattan's luxury market.

NIKKI FIELD (The Field Team @ Sotheby's International)
"I returned last week from a sales trip to Beijing, Shanghai and Hong Kong. The Chinese appetite for Manhattan Residential Real Estate is exploding. International buyers consider the NY market a stronger investment opportunity than other global capitals. A recent International market survey determined that residential values in Manhattan are -18% below London, -54% below Moscow and a whopping -94% below Hong Kong. No wonder the Chinese are taking advantage of the current market correction here. Their target is predominantly the over $5m market. They are purchasing for personal use as well as income investments. My 12 day trip has delivered a dozen deals in play to date.

With 1 European investor, I currently have in contract 3 brand-named condo deals: $7.5m, $13.3m and $15m. All selected during a 2 day shopping marathon.

Regarding my own exclusive listings inventory, I have closed or have in contract in Q1, 9 exclusive properties. A number of these listings had been languishing on the market for close to a year. In some cases, price corrections were surgically administered, but none were signed below fair value. "
My comment: I heard multiple stories from colleagues I trust confirming what Nikki says above about Chinese appetite in Manhattan high end property. An all around great quote from Nikki that goes into some detail on the recent deals her team executed. Can't get better than that.

FREDERICK PETERS ( (Frederick Peters @ Warburg Realty)
"I can't yet give you specific apartments. But overall, we are seeing that properties with trophy qualities, including, size, view, condition, and/or location, seem to be commanding prices 10% to 15% higher than they were at the beginning of the year. Many of the top pre-war buildings are seeing sales price as high or higher than at the peak of the market, with price records being set in building after building. One thing after another selling in overbids. One simply cannot believe it."
My comment: Fred is a manager and leader at Warburg and has access to all the firms' recent production. It would be silly to ignore what he is saying about the high end market right now given the data on recent high end executed contracts that he has. With that said, its important to note that he is commenting on 'trophy properties', that have that extra something that high end buyers pay up for in Manhattan.

DEANNA KORY ( (Deanna Kory Team @ Corcoran)
"The high end market on CENTRAL PARK WEST is super strong. $7M+ is selling @ record prices and really quickly. I am having a bidding war on a near $10M apartment. With 4 bids over ask in 5 days!"
My comment: Again, hearing actual examples is what people always ask for, so here you have it. Looks like she is seeing the action in the $7M+ market, so make that note as my charts are showing the $5M+ market. How you define 'high end' in this market can make a difference and some would consider $10M+ the 'high end' in Manhattan. Its fine, I just want to point out that the chart above is for $5M+ properties.

YUVAL GREENBLATT( (Manager @ Douglas Elliman)
"It's funny you ask because only yesterday an agent in my office expressed concern that there wasn't much inventory in the very high end. Generally speaking, the 5mm+ market has been substantially active with few quality listings available. An example of activity within the past week is a CPW listing of ours that went quite a bit over the ask. "
My comment: We have to re-engineer our Chart UI (user interface) in order to see supply trends in the $5M+ market. We are working on it. For now, I can't quantify supply trends in this price point but from what I hear from colleagues there is just not that many quality products with the desirable features that buyers pay up for in the $5M+ marketplace. This could explain why buyers are chasing the good stuff that does happen to come to market.

There you have it! Actual data and anecdotes on how Manhattan's high end is doing now. Here is your chance to speak out on your personal experiences, as that helps all of us understand the market best!

WHAT ARE YOU SEEING???


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