Wednesday, January 19, 2011
New York Central Park flat: Pros and Cons
New York Central Park Flats: Pros vs Cons
Many foreign investors ask for Central Park flats/apartments. One reason is the perceived value of such flats and another is that Central Park is one of the locations foreigners associate with prime Manhattan property. Other locations include Fifth Avenue and Wall Street.
Should you buy a Central Park flat as an investment? It depends....
* Central Park brand: Flats facing Central Park command a premium and the ones on Fifth Avenue facing Central Park are perhaps the most expensive of all. For example, 820 Fifth Avenue had an apartment that recently sold for $44 million. The value should hold because Central Park would always be there. It's also a globally recognized address, nice during cocktail chats, ie talking about owning an apartment by Central Park.
* Low supply: There are just a handful of condos that are very close to or facing Central Park. Most are coops which are not investor friendly. Hence a Central Park condo will have strong demand when it's time to sell (assuming the buyer pays the premium asking price).
* Enjoying the Park: Being steps away from Central Park is a huge benefit especially for those who enjoy running, biking and the many outdoor activities that Central Park provides.
* At night, a flat facing Central Park looks out at a dark blanket.
* Manhattan property market's appreciation is driven by market averages. For example, one could buy a $10million flat facing Central Park but that $10 million flat should appreciate by the same rate as a $2 million flat that is not facing Central Park. Having five $2 million flats provides diversification to having one $10 million flat (if we remove transaction costs which is mostly variable anyway).
The way to identity the right investment property is to determine your objectives. eg why do you want a Central Park flat? For brand name? That's a good reason. Because you think Central Park would appreciate better than non Central Park? Hmmm.... not a good reason.
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