Savills World Research US Residential

Market in Minutes New York Prime Residential Markets 2016

A DECADE OF CHANGE A global powerhouse, domestic and international wealth has fuelled the expansion of New York’s prime residential real estate markets

New York is one of the most The sheer diversity of factors in Although costly by US standards, prime diverse, globally connected and the city’s success make New York’s New York residential real estate is still high performing cities in the world. residential real estate highly sought- relatively good value by global levels Alongside London, it stands apart after, from the international wealthy (Figure 1). Prime prices are 35% less than from any other city as a true global seeking a foothold in a global city London and 61% below Hong Kong, but powerhouse. through to local young families rising, increasing by 42% from $1,200psft realizing the appeal of urban living. in 2008 to $1,700psft in 2015. A world leader in financial services, technology and media, New York Strong occupier demand and hosts a large number of global limited supply has pushed up prices company headquarters, is an so affordability is a growing issue “Prime residential real estate is still important center of education and for many. relatively good value by global levels” a tourism destination.

savills.com/research 01 Market In Minutes | New York Prime Residential Markets 2016

five trends 1. Prime expansion At the upper end of the prime market, 3. CONDOS RISING Figure 3 Chelsea, Greenwich Village, Tribeca Condominiums vs cooperatives, price premium () defining New The longest established prime and Midtown have all seen rapid New York’s prime residential market residential markets are in Manhattan growth in the number of $5m+ sales. is dominated by two property types: n Condominium premium — Cooperatives — Condominiums York’s prime on the Upper East Side and Upper From just a handful each in 2005, all cooperatives and condominiums $2,500,000 100% residential West Side, bordering . The these neighborhoods recorded more (condos). Condos have historically Upper East Side is known for its large, than 50 in 2015. This comes as new been in short supply compared to markets classic New York apartments, while condominium stock is delivered to coops, constituting only 25% of the $2,000,000 80% the Upper West Side is a somewhat appeal to the super-prime market. Price market, but are effectively the only

more relaxed and accessible growth has been especially apparent type of apartment building that is $1,500,000 60% has long been the alternative. Together, these two large in Midtown where many super prime freely available to foreign buyers. preeminent US city and dominant neighborhoods accounted for 38% condo schemes are concentrated. The on the global stage. Its population of all $1m+ transactions across average sales price here rose by 193% High demand from a broad base $1,000,000 40%

rose from 8 million to 8.5 million Manhattan and Brooklyn in 2015, and to $3.8m in the ten-year period. including foreign buyers (who plugged sales price Average in the last decade and its metro 47% of all $5m+ transactions in 2015. the gap left by domestic purchasers $500,000 20% Condominium price premium population now totals 20.2 million. during the economic downturn) GDP in the metro area has grown The generation of new wealth in the city means that new condominium delivery 2. TECH WEALTH $0 0% 41% from $1.15 trillion in 2005 to has pushed the prime markets into new has expanded rapidly since the late 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $1.62 trillion in 2015. Rapid growth in neighborhoods. The Financial District The priming of new markets comes 1990s and early 2000s. Most has both human and financial capital has saw 385 deals over $1m in 2015, more as wealth is generated in new industry been targeted at the upper tiers of Source: ACRIS/Savills World Research fueled the city’s real estate markets than ten times the 35 deals recorded in sectors. Historically, Wall Street has the market and has led to a widening and shaped its urban fabric. The five 2005. Harlem, Williamsburg and Park been a key driver of the luxury markets, in the price differential between  The number of $5m+ transactions in Tribeca has grown by 527% since 2005 key market trends of the last decade Slope all saw increases of a similar but has now declined in importance coops and condos. Average condo are: prime expansion, tech wealth, magnitude (Figure 2). Even Downtown as bonuses have fallen by 9% in 2015 prices have grown by 82% since the rise of condos, new improved Brooklyn, a market where no deals over alone. Tech is the new wealth generator, 2005, compared to growth of 47% product, and New York as an elite $1m were seen in 2005, recorded 64 and jobs in professional, scientific in cooperatives. In 2015, Manhattan global market place. such deals last year. and technical services grew by 29% condominiums were on average 92% between January 2010 and January more expensive than cooperatives Figure 1 2016. Financial service jobs grew by (Figure 3) with an average sales price Global prime price league just 8% over the same period. of $2.4m, compared to the average $5,000 coop sales price of $1.23m. 2008 2015 New York has a huge advantage in the digital age because of its high The rapid condo growth may have $4,000 ‘millennial to boomer’ ratio. Young peaked, though. In 2015, for the creative talent is attracted to its vibrant, first time since 2011, cooperatives $3,000 urban environment. This human outperformed condominiums, with price capital is the most important asset for growth of 8% and 6% respectively. With $2,000 growing tech and creative businesses the luxury condominium sector now and cities such as New York are looking fully supplied, we anticipate that

Prime price per sq ft better attractors of it than suburban the gap between coops and condos will $1,000 campuses and business parks. close a little in the next few years. Figure 4 $0- New wealth is bringing with it new Midtown condominium availability and absorption LA LA

Paris Paris property demands. Tech companies, Dubai Dubai Tokyo Tokyo Miami Miami 4. NEW IMPROVED n Available units n Contract signed units Sydney Sydney London London Mumbai Mumbai Chicago Chicago Moscow Moscow flush with venture capital, are operating Shanghai Shanghai New York New York Singapore Singapore PRODUCT Hong Kong Hong Kong with a unique set of guidelines that were 250 San Francisco Source: Savills World Research San Francisco not previously representative of the Manhattan’s new high-end condos typical corporate occupier. For these sold at a significant premium to the 200 tenants, the cost of space is secondary resales market, at between $2,000psft Figure 2 to being in the ‘right’ location. Work and $7,000psft. Individual sales have 150 Fastest growing $1m+ markets (neighborhoods recording more than 100 such sales in 2015) locations overlap with where the tech set new price records for the United District Growth in number of $1m+ sales 2005-2015 talent wants to live and so rents and States on a dollar per square foot prices have been fueled in the markets basis and distinct clusters of new 100 1 Harlem 1344% of ‘Silicon Alley’ around the Flatiron product have emerged, establishing Number of units 2 Financial District 1000% District, and in DUMBO in Brooklyn. new prime areas in their own right. 50 3 Williamsburg 968% The rise of the digital economy in 4 Park Slope 939% New York City will continue to go The concentration of super-prime hand in hand with rising real estate product around West , 0 5 Midtown West 528% $0-$3m $3-$5m $5-$10m $10-$15m $15m+ prices in these and other new including , , Source: ACRIS/Savills World Research emerging neighborhoods. 252 East 57th Street, , Source: Stribling Marketing Associates

02 savills.com/research 03 Market In Minutes | New York Prime Residential Markets

432 and 520 Park Avenue range of international buyers have led this Midtown location, looking not just for a place to live historically known for its corporate and work but also to invest, led by Outlook headquarters and retail, to be dubbed those from Asia and Latin America. n New York City is set to add another million ‘Billionaires Row’. Prices on these residents by 2025 according to forecasts. projects have topped $9,000psft, New York City is one of the few US Housing delivery at lower market levels and the making Midtown one of the fastest markets to attract international buyers renewal of more city districts will be needed growing prime markets in the last ten of ultra-prime property. to meet demand. Expect residential price growth years. The upper end of this sub- in Queens, Jersey City and Brooklyn. market is now fully supplied relative It is one of three global cities, to recent absorption (Figure 4). along with London and Hong Kong, n We anticipate future outperformance of any that has seen record deals in excess buildings that are distinctly ‘New York’ in style. This The High Line, a linear park built on of $13,000psft, namely the sale of a may include townhouses, a product in limited supply. a disused railway spur, has been a penthouse at 15 Central Park West in catalyst for new development on the 2011 to a Russian billionaire. n In a Savills/Wealth Briefing Survey of real estate West Side. Projects include Jardim and investment intentions among wealthy individuals, 520 West 28th Street, by the late Zaha New York City is home to the New York emerged as a ‘net hold’. As a strong Hadid. Downtown, the Financial District greatest concentration of billionaires US dollar will weaken the purchasing power of is seeing a wave of new condominium on the planet (Forbes). Hong Kong’s international buyers, domestic purchasers (and product, including One Seaport, a 53 billionaires, and London’s 19, coops) will become increasingly important again. 60-storey super-prime tower. compared to 74 in New York.

Elsewhere, Hudson Yards, the largest The US is a huge wealth generator private real estate development in and it is this that is now helping  The city is a true global powerhouse US history, is set to establish the fuel the top end market. In 2015, far west side as a luxury residential Chicago-based hedge fund manager location. It has already raised $600m Ken Griffin signed a contract on a from foreign investors via the EB5 yet-to-be completed triplex investor visa programme. penthouse at for $200 million – a new record in absolute terms. 5. ELITE GLOBAL MARKETPLACE Both American and global ultra- high-net-worths seek out New York Alongside home-grown talent, property for investment and New York also attracts a diverse a gateway world city base. n

Savills team World Research Global Residential Stribling, New York

Yolande Barnes Paul Tostevin Hugo Thistlethwayte Kirk Henckels Geoffrey Martell Tara Hogan World Research World Research Head of International Vice Chairman Director of Data Senior Vice President +44 (0) 20 7409 8899 +44 (0) 20 7016 3883 Residential +1 212 452 4402 and Training Stribling Marketing [email protected] [email protected] +44 (0) 20 7409 8876 [email protected] +1 212 452 4450 Associates [email protected] [email protected] +1 646 613 2694 [email protected]

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