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$ 9.5 billion in transaction
volume
in three months:
The luxury real estate business is booming again in Manhattan - preferably with home offices
Photo:
ANGELA WEISS / AFP
So far, more than 2.6 million corona cases in around 8.5 million inhabitants, plus around 57,000 people who died in connection with a corona infection - New York was hit by the pandemic like hardly any other US metropolis. The pictures from 2020 are still present to many: hospital tents in Central Park, refrigerated trucks with corpses in front of hospitals and the US Navy hospital ship "USNS Comfort" in the port of the city.
New York has now recovered from this dark period. Life pulsates again in the Big Apple. The streets are full of people, as are the restaurants and shops. "The city is in a unique spirit of optimism," says
Sebastian Steinau
, with whom manager magazin met for a Zoom meeting. Steinau, born in Germany, studied in London, has been a real estate agent in New York for six years. In the interview he talks about working in Corona mode, the comeback of the New York real estate market from the pandemic valley - and what role New Work is now playing in the sale of luxury apartments and townhouses.
manager magazin: Mr. Steinau, how is it as a luxury real estate agent in New York at a time when the corona crisis has not yet been ticked off, but at least the worst is hopefully over?
Steinau:
It's now a great atmosphere again in the city.
Of course you can still see masks in public spaces, for example in the subway or on buses.
Overall, however, you hardly notice anything of Corona in New York at the moment.
Life goes back to the way it used to be, almost as if nothing had ever happened.
In contrast to the current situation in Germany.
No changes in day-to-day work, i.e. keep your distance, wear masks, hygiene concepts et cetera?
Hardly any more now.
We had a total lockdown that started in March 2020.
As a New York broker, we weren't allowed to work at all for about three months, so we weren't allowed to meet clients in person.
After that there was a lot of bureaucracy with documents asking about corona and symptoms and the like.
Customers had to fill this out and it was sent to the sellers.
That no longer exists.
How does a customer appointment work today?
Today we are still viewing apartments with the face mask on.
But if everyone present agrees and you have briefly exchanged information about the vaccination status, this is also done without a mask.
Personally, I actually only wear the mask in public buildings or in the subway.
Otherwise hardly any more.
"The real estate market in New York City is currently very strong"
And how is business, has the New York real estate market also left the crisis behind?
Yes, things are definitely looking up again.
The real estate market in New York City is currently very strong - the number of transactions is increasing rapidly, especially in the upscale segment, i.e. for apartments from five million dollars.
In October alone, 125 transactions were registered in this segment in the Manhattan borough, an increase of 191 percent compared to October 2020 and 71 percent compared to September 2021. Last week alone, 60 transactions for four million dollars were completed in Manhattan.
That is an approximate transaction volume of half a billion dollars.
The market is currently picking up speed.
It hardly looked like that until recently.
Yes, prices have suffered a lot over the past five years, especially in the upscale segment.
The reason was a combination of excess supply in the luxury segment and geopolitical developments.
The pandemic, especially after the lockdown in March 2020, paralyzed the real estate market, as it actually did everywhere in the world.
Some markets then quickly recovered.
For example?
The real estate market in Miami went through the roof as early as June 2020.
New York City did not experience this recovery at first.
The upswing only started in the summer of this year - and it still has enormous potential.
Because in contrast to Miami, where the offer is completely sold out, New York still offers many possibilities, the offer is there.
How are prices developing, is this also going up?
In the luxury segment, the prices are typical for New York City.
I just brokered a 550 square meter apartment for $ 50,000 per square meter.
The range of the New York luxury segment even goes back to over 100,000 dollars per square meter.
It must be said that there are also cheap investments in this segment, as the sellers of these properties are still under good pressure.
For example, an apartment in one of the city's finest buildings near the UN headquarters on the East Side of Manhattan has a square meter price of less than $ 20,000.
That's a bargain by New York standards.
It can also be heard that price discounts are granted even in the high-price segment. How does that fit together?
These high price discounts are actually only available for the really big tickets.
For example, a $ 30 million unit recently received a 25 percent discount.
The best-known example is the sale of a 740 square meter residential unit in the Central Park Tower, the tallest residential tower in New York.
The penthouse sold for $ 50 million - it was originally supposed to cost $ 95 million.
The reason for this is the long lull in the real estate market and the subsequent pandemic.
The luxury segment on the New York market has suffered for years, now there is a lot on offer for a small target group of ultra-rich buyers.
You have many German customers who purchase properties in New York, what can you say about these investors, what kind of people are they?
The typical German buyer on the New York real estate market is a wealthy medium-sized company, perhaps the owner of a hidden champion, professional asset managers who are responsible for families and their investments in their family offices - but also a wealthy employee in a leading position, such as a banker. These buyers often pursue the idea of diversification. You already have investments in the euro area and want to expand your portfolio in the US dollar area. In addition, there is often an affinity for America and a belief in the long-term strength of the USA and especially New York as a location. Ultimately, New York is and will remain one of the most exciting and dynamic cities in the world.
What role does the Corona issue play in the real estate market? Many people continue to work from home. Is that an issue when marketing residential real estate?
The demand for a separate workplace or home office is absolutely an issue and has risen sharply in buyer priority.
This is about a private office with the classic technical equipment for working from home.
Corona has permanently changed New York City in this regard, a spatially separated home office space is now an established standard.
"Everyone is looking for apartments or townhouses that have a home office"
In other words, buyers specifically ask about it?
Yes, many buyers say they need the option of an additional home office or a room that converts into an office.
The question of working from home comes up in 90 percent of my conversations with customers.
After all, we still don't know exactly how the corona crisis will develop and when it will all be over.
That is why all buyers are now looking for apartments or townhouses that have a home office.
And one more thing: Buyers are now also looking very closely to see whether there is a private open space, i.e. a balcony or a terrace.
This is very important to many customers.
And especially in New York, the offer with these possibilities is very rare.
You quickly get into a higher price category.
That means in concrete terms?
I was just with a customer in the West Village, on the Hudson River side, that is, on the west side of Manhattan.
If you have a budget of 20 to 50 million dollars, for example, there are really few options if the customer values private outdoor space.
That sounds bizarre, but the product has now almost been bought so empty that the prices are already rising further.
There aren't very many buyers on this budget, of course.
But in the end you can apply that to the price range of two to five million dollars, and it looks similar.
Does that mean that an existing home office or private open space now increases the value of a property?
Yes.
Home office and private outdoor space.
There is also the model that you share the outside area with other residents.
These are clearly the trends at the moment.
Are sellers already reacting to this development, for example by creating a work space in their property and thus increasing the value?
Yes absolutely.
The only problem is that these investments are very expensive.
The construction companies are fully booked.
Craftsmen have an awful lot to do because everyone comes with these wishes.
That drives up the costs.
In what order of magnitude?
I now had a project on the Upper West Side, right on Central Park, where I represent the seller.
We're not investing in a home office, but the floor plan provides for a workplace.
There we have now landed at 10 percent above the original selling price.
The contract has already been signed.
Would you say that this development is also taking place in other metropolises in the USA?
I am bad at judging other markets.
But you have to say that the central part of New York is just the small island of Manhattan.
There, natural space is very limited, which affects prices.
When I have a two-bedroom apartment and there is even a study with it, that is a luxury.
If there is also a private open space, then of course the value increases exponentially.
New York is unique in that respect, perhaps only comparable to Hong Kong.
The area in Manhattan is basically extremely limited and you can only go up.
In this respect, this is a unique situation that will always keep the real estate supply in New York rare.
What returns can investors get with a real estate investment in New York?
It's hard to put an exact rate of return on investment.
There is a special model that I have just sold to a German customer.
It's about a luxury apartment, 160 square meters, two bedrooms with a spectacular view of downtown Manhattan, which is connected to a luxury hotel.
During the time that the owner is not in New York, the apartment will be let through the hotel.
That can result in a return in the upper single-digit percentage range.
This is a special case. What about the returns in general?
It is difficult to generalize.
New York is a special location.
In general, one could say that returns are possible, such as those that buyers of holiday properties in special German locations such as the island of Sylt can achieve.
However, many customers invest in New York not solely because of the prospects for ongoing returns, but because of the prospect of a strong increase in value associated with such a property.
What price development do you expect in the coming years?
The prices will certainly continue to develop positively, as New York still has some catching up to do.
All indicators are already pointing to this.
In addition, due to the pandemic, foreign buyers have not yet had a chance at all.
Further strong impulses are to be expected.
The best time to buy real estate in New York was 20 years ago;
we are just about to reach another such turning point.