How to invest in New York
Luring Kazakh investors to the financial capital of the United States, American companies open offices in Almaty
Gennady Perepada believes that real estate prices in the United States have not yet reached pre-crisis levels
New York remains the largest market by volume of real estate transactions in the world, according to the recently published report of Cushman & Wakefield. The study was conducted among the top 25 global cities in the world. In the Big Apple, the real estate market reached $649 billion — up 16.7% from last year. Analysts note that real estate prices in the U.S. in general and in their financial capital in particular are rising, making this investment vehicle attractive to investors from around the world.
«Although real estate prices in the U.S. have started to rebound — growth averaged 7-12% in 2012 — the cost of the average home has yet to reach pre-crisis levels,» notes Gennady Perepada, founder of One and Only Realty.com, a New York-based real estate agency.
In his opinion, the largest American metropolis is one of the best real estate investment markets in the world. «When we talk about luxury apartments in New York City, prices remain high regardless of the crisis phenomena in the U.S. market as a whole,» says Perepada. According to a recent ranking of the cities with the most expensive real estate published on forbes.com, New York ranks sixth, while Hong Kong is the leader, followed by Tokyo and London. While prices are stagnant in London and Paris, New York has seen further growth, presenting interesting opportunities for investors.
New York is one of the world’s leading business,
financial and cultural centers, and its influence in politics, education, entertainment, media, fashion and art contributes to its status as the capital of the world. With more than 200,000 businesses, including 53 of the world’s largest corporations and two of the world’s leading stock exchanges, the city has one of the most developed and integrated economies in the world.
As noted by analysts Cushman & Wakefield, if London is the largest market for office real estate, Hong Kong — retail real estate, and Los Angeles — warehouse and industrial real estate, New York — hotel and residential real estate.
These investment instruments, according to Perepada, are attracting investors, including those from Kazakhstan. Observing increased demand from Kazakhstani investors, he opened an office in Almaty. Gennady stresses that they are especially attracted to real estate in Manhattan, where they can buy a one-bedroom apartment for $1.7 million or multi-million dollar apartments in Trump International or The Plaza, to live next door to the world’s celebrities. The interlocutor estimates that demand is growing as more high-rise residences (Class Luxury & 5-Stars) appear in Manhattan.
«Foreign buyers now account for about 30% of the real estate market in New York, with investors from the CIS and Asia being the largest group. And in the new construction market, their share is approaching 50%,» points out Perepada. This correlates with figures in the report of Cushman & Wakefield — 32% of the total amount of transnational investments in real estate made by representatives of Asia.
Realtors explain this interest in real estate investing by the fact that this market is much more protected than the stock or business markets.
Its price trends are more resistant to external factors. Plus, real estate brings a stable and predictable income. And this income is almost always higher than the inflation rate.
«We’re currently seeing double-digit returns on investments in areas like New York and Miami Beach. These returns are compelling compared to stocks or commodities trading,» Perepada states.
One and Only Realty.com estimates that real estate in New York City is attractive to both conservative investors (rental income is 3-6% a year) and those set on higher returns — prices have risen 12% in the past year. The monthly rent for a one-bedroom apartment (from $2,700 to $4,500) has already equaled the mortgage payments for a similar condominium. And the average cost per square foot settled last year at $4100, up 47 percent from 2005. In other words, despite the collapse in 2008, the upward trend for real estate in New York City continues.
«Many indicators suggest that demand for real estate will grow and expand into new markets, leading to a growing share of international investment as investors lower the bar on risk. Assuming the U.S. economy continues to recover, we can assume next year will be favorable for most of the world,» says Carlo Barel di Sant’Albano, a Cushman & Wakefield board member.
According to Perepada, the future growth of real estate values in New York City is assured due to three major components that drive the city’s continued economic development: it attracts the most talented people from around the world; it attracts more investment, both national and international, than any other world-class city; the city’s infrastructure and political and economic regime drive growth (for example, laws allow easy opening and development of new businesses, business laws and real estate laws provide for.