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Where to look in Manhattan: There is a place where the weak dollar benefits foreign buyers

Will Europeans take Manhattan?

Armed with more spending power thanks to the favourable euro/dollar exchange rate, European buyers are scouting out the residential property market.Alexander Kraft, European regional manager and senior vice president at Sothebys International Realty, said New York - along with Miami, Palm Beach and Los Angeles - has long been a popular destination. Now there is the added incentive of a strong currency."I have heard several times (from clients) that now seems to be a good time to buy generally in the US as prices in many markets have levelled and don't seem to be rising," Kraft said. "This, combined with the favourable exchange rate, certainly motivates people to look a bit more closely."Jonathan Miller, president of Miller Samuel, a Manhattan property company, said he has noticed more Europeans buying properties in the second half of the year, compared with the first. "It seems logical that the favourable exchange rate is one of the factors," he said.In five years, Manhattan property prices have risen 64 per cent. In the past year alone, the average price has increased 8 per cent to a record $916,959 in the third quarter from $849,013 a year ago, according to the most recent Douglas Elliman Manhattan Market Overview.

Even so, New York brokers said interest from European buyers has been picking up on some levels. JoAnne Kennedy, chief operating officer of Coldwell Banker Hunt Kennedy in New York city, said European buyers have increasingly been inquiring about luxury properties.This is a good indication of improving overall economic conditions in the US, which is a draw for prospective buyers."I think it is inevitable that Europeans will start buying more US properties," Kennedy said. "If they had the will in the past, now they have a greater way."

Jacky Teplitzky, executive vice president at Douglas Elliman, said interest from European buyers had increased in the past six months."If there is any area in the US where there is a good, solid real estate market, it is Manhattan - it is an island so there is a limitation on how many new buildings can be constructed and there is limited inventory," she said. "We have had a very strong market because of low interest rates and because we haven't had much new construction over the last few years. We have the same - or even more - demand with less inventory."According to Miller and Samuel, the inventory of homes for sale dropped 14 per cent in the third quarter, while the average number of days a property remained on the market declined to 137 from 142.Teplitzky estimated there were about 20 per cent more European buyers this year compared with a year ago, when many people were still cautious about the US amid fears of further terrorist attacks. That appears to have changed this year."At the beginning of the year (foreign buyers) started to browse in the real estate market and by mid-year had narrowed down the apartments they wanted to buy," she said. There is greater confidence in New York, which has been compounded by the strength of the European currency.

With Manhattan real estate prices soaring and inventory declining, are there any areas where prospective home-owners should focus their search?Teplitzky said buyers looking for appreciation should consider the area around the East 90s - from Fifth Avenue to York. "The East 60s, 70s and 80s are already well-established. The 90s are a relatively new area and people are starting to explore there," she said.She also recommends looking downtown in Battery Park City, which should benefit from the World Trade Center reconstruction and improved transportation, and the area around Columbia University, in Morningside Heights.For buyers willing to place a bet, the place to buy is around Columbus Circle and the new $1.8bn Time Warner Center, Teplitzky said. The pair of 80-storey glass towers will be the new home for Jazz at Lincoln Center and will house luxury shops and upmarket restaurants. "Prices of the properties in the surrounding area are going to go straight up after the restaurants and shopping centre open," Teplitzky said.



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