Manhattan Round-table: State of the Market

Posted by urbandigs

Thu Jul 7th, 2011 07:48 AM

A: Lets check in with some of Manhattan real estate's elite producers and managers to see what they are seeing in the field now that Q2 came to an end. Consider this a Manhattan round-table on the current state of the market.

First, another quick look at Manhattan PENDING SALES vs $5M+ PENDING SALES - just to show you how Manhattan's higher end has compared to the broader market in terms of pace of demand:

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Our system lets you narrow charts down to neighborhood, price point, and # of bathrooms so its impossible for me to cover every section of the market in onde discussion - for full access to all these real-time tools, please subscribe here.

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RAPHAEL DENIRO (The DeNiro Group @ Douglas Elliman)

"We're seeing a typical seasonal slowdown but nothing too dramatic. The $5M and up market is very healthy. We noticed a bit of hesitation out there when the DJIA was down 6 weeks in a row but Equities markets seem to have stabilized which is critical to the overall psychology of Manhattan RE"
My comment: The 'bit of hesitation' Raphael refers to was the ripple effect of a possible Greek debt default. As is the case since 2009, a second bailout plan was passed with the hope to buy time. Does it solve the underlying issue in the EU? No. Expect more volatility in equity markets once the PIIGS (Portugal, Ireland, Italy, Greece, Spain) debt issues resurface. You can only kick the can down the road for so long. If/When equities do react sustainably to underlying debt issues that linger out there, expect a negative wealth effect to impact our markets at a lag. For now, its just a concern.

I agree with the action in Manhattan's higher end segments, they have performed wonderfully for the past 6-8 months or so. The data continues to show that Manhattan had a very active 2011 start so far.

NIKKI FIELD (The Field Team @ Sotheby's International)
"Q2 continued to be all about the International Buyer. In particular, the world's Emerging Elite are at our shores. China and India are now surpassing our European and Russian customers in volume purchases, however their price points tend to be lower as they are sampling the residential inventory buffet. Many new skills sets are needed to best represent these culturally diverse purchasers. The Chinese tend to approach their negotiations as an on-going dialogue with dramatic direction reversals while the Indian buyers exercise restraint and patience and wait until the seller capitulates. Whatever the origination, these global investors recognize the Manhattan market as a safe and opportune target.

Real time Data: Our Team signed 11 new deals this quarter, 6 were purchased with non-dollar currencies. We have 9 deals in play today and only 3 are US buyers. Summer 2011 is proving to be a new foreign invasion."
My comment: I love Nikki's in depth comments on her team's in the field observations. This is not the first time I am hearing stories of foreign buyers splurging on Manhattan property, especially Asian investors. Very interesting to see the majority of the Field Team's deals are foreigners. The depth of wealth that is interested in Manhattan property never ceases to amaze me. While Manhattan is not immune to market/macro forces, you simply cannot compare the behavior of this marketplace to other big US cities that are still searching for a bounce in activity and a bottom in home prices.

FREDERICK PETERS ( Frederick Peters @ Warburg Realty)
"The second quarter rolled in like a lion and rolled out more like a lamb. We saw prices at all time highs for some larger properties in April and May, but as summer began my agents saw the pace of co-op transactions slow across the boards as economic realities once again made many New Yorkers apprehensive about the future. Foreign buyers meanwhile are keeping the condo market strong. "
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, we have further confirmation on 'foreigners buying Manhattan property' and how bids were coming in for 'larger properties'.

DEANNA KORY ( Deanna Kory Team @ Corcoran)
"The market slowed a bit in Q2 in certain segments. Since I deal more UWS and UES, I can say that high end did really well if a great and unique apartment. Large above the trees CENTRAL PARK WEST Apartments sold high and Park Avenue was steady in the 7 plus room category. Overall, 2 bedrooms continue to sell remarkably well. We did see some slowing in the classic 7-8 room UWS sales unless priced so they felt like a "value". I sold a classic 8 corner unit @ the white house for $9,910,000. It was a record for an 8 in that Building. "
My comment: Getting record prices for larger units is something I have heard from a few colleagues lately. Submarkets with tight inventory but high price points, like Tribeca & W Village, are surprising us with how bids are coming in for well priced high in desirable product that hits the market. There is money out there, thats for sure.

JACKY TEPLITZKY ( Managing Director of The Teplitzky Team @ Douglas Elliman)
"The market is very volatile but steady. Prices are stable. There is less volume of buyers but the ones that are active are serious buyers. Sellers are being more realistic and are willing to price correctly if you give them all the facts. This is a good time to get price reductions as sellers are concern about being stuck during summer months. Sellers that want to "try" pricing higher will suffer as the buyers are very savvy about what a correct price is. Properties in bad condition will take longer to sell.

There is a shortage of apartments above 5M. That segment of the market is strong. Foreigners are buying for investment and pied-a-terre. Brazil, India and Far East leading the market here in NYC. "
My comment: Another great quote from a consistent leader in sales volume in our industry. What I love best about this quote is what I underlined, "sellers are being more realistic and willing to price correctly IF you give them all the facts"! Love it. This is why I built the UrbanDigs.com real time data platform that is customizable to every segment of the Manhattan marketplace. Show sellers what is happening in their neighborhood & price point! Help them price correctly! We also have further confirmation on the action in the high end and the lack of well priced quality product. You cant just take an average cookie cutter 2,500 sft apt with so so views and price at $5M and expect a strong bid. Its those unique apartments that have that something extra-ordinary that buyers right now are bidding up for! That's the segment of Manhattan real estate that has been on fire lately!

And there you have it, real-time observations by some of our industry's finest combined with actual data to quantify whats really happening out there.

WHAT ARE YOU SEEING???

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