Sunday, March 7, 2010

New York Property - Bullish

New York Property - Bullish

Last year, I attended a New York property seminar where the key attraction was a panelist who is a property celebrity in New York (Manhattan).

During the panelist session, this panelist pulled out a New York property article and said she wanted to share points from an article she read about why we should be optimistic about New York property. She mentioned the points – good numbers, landlocked, demand from emerging markets and finally air quality is "pristine".  It sounded very familiar but that “pristine” quote confirmed that she was quoting my article that was published in This was confirmed after the panelist session.  Here are the points again, summarized and edited to reflect new info.

The Numbers:
LA and San Francisco property declined more than 40 percent vs peak, but New York property declined only 20 percent. The US stock market declined 40% in 2008. This shows that New York property is less volatile that other major US cities or the stock market. 

My recent article, New York property annual return, published in TheStreet and Fidelity Investments, showed that from 1997 to 2009, New York property had average annual returns of 10 percent compared to the Dow’s 2 percent.

New York is a landlocked island. Property developers in other cities keep expanding outwards of the core but property developers in New York cannot do this. With New York regulations, we can build upwards but this is one of the most stringent cities. It is easier said than done.

Capital of the World
New York is a global destination. BRIC countries Brazil, Russia, India and China are creating millionaires by the week. New York is often the first international destination the new rich want to visit. It is also the first place where they would buy investment property or a pied-a-terre.   In the western world, what are the alternatives that have the same prestige and brand recognition? London? That's so 30 years ago. 

Diversity of Industries:
Finance was the main industry a decade ago but now the industry mix is more diverse. Beside Finance, New York is established in Media, Real Estate, Hospitality, Advertising and Professional Services. These industries will be selling to emerging market economies and will benefit the local New York economy in terms of job creation and housing demand.

Quality of Life
The air in Manhattan is pristine compared to air in China or Hong Kong.  New York's transportation system, although via a 100 year old subway, is still efficient and reduces commute time for those living in Manhattan. The legal system is established and work-life balance is good.  These are major considerations for attracting global talent.

Hence I argue that New York is still the top in terms of brand recognition, annual return and prestige.  Property market in China and Hong Kong is a casino.  London is so 1970s.  Yes, Obama's policies will create inflation but that's why property is good.  It's a hedge against inflation because rents and property values will increase when there's inflation.  With a fix mortgage rate, that becomes a very good thing over the long run.

Our website Castle Avenue Partners - Manhattan investment properties
Original article on TheStreet
Avg annual return of New York property

New York Property

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