Monday, June 30, 2014
New York residential property projects
Buyers would typically put down 20 percent to book a unit and come up with the rest at time of closing. If there is financing involved, the mortgage loan comes in at closing and the mortgage payments only start after closing date.
The biggest advantage of buying in a new residential project is the price discount associated with buying a property off plan. This means buying without seeing the completed product.
Assuming there is no recession between now and when the residential project is completed, prices at the time of closing is usually higher than what was paid at the pre-construction period. Reason is that buying off plan entails risks and the price discount accounts for the risk the buyer is taking.
The main downside is, if the property fails to complete, the buyer's down payment would be tied up and potentially lost.
In today's market, new residential projects are selling so well that developers are not negotiating on price or terms. Buyers globally are coming in and using New York's new residential projects as a way to realize out-sized capital gains.
Most new projects have prices ranging from $2,500 - $3,500 per sqft. Prices of the apartments range from $5 million to $30 million and the buildings usually have less number of units (eg below 30 units).
For example, Sterling Mason (pictured), has apartments starting at $4 million with the penthouse asking $23 million.
This in contrast with the prior new construction wave of 2006 to 2008 when prices were between $1,000 to $1,500 per sqft.
Besides price, today's new construction projects do not come with a tax abatement. This means taxes are not discounted for the initial years (unlike projects built in the 2006-2008 period).
Wei Min Tan is a Manhattan, New York condominium specialist focusing on investors and global clients. He speaks Cantonese, Mandarin, Malay and is often interviewed by the media including CNN, Wall Street Journal and New York Times. Wei Min can be reached at firstname.lastname@example.org