Right now due to the new tax laws, some parts of the real estate market will be see price depreciation. See previous coverage.
However, some developments like the Upper West side’s Park West Village may see continued price stability and appreciation. The reason is that real estate taxes and SALT (state and local taxes) will no longer be deductible beyond $10,000. So if you have the funds to purchase an apartment and your cap is below $2.5 million, paying $22,000 per year in taxes may not seem as appealing. Or let’s say your budget is $1.5 million and knowing that in one apartment you will pay $15,000 per year in taxes, most of which will not be deductible or $3600 per year in taxes? Which apartment will you gravitate towards?
This is why Park West Village which is a 4 building condo development built in early 1960’s and other developments with tax abatement may see a surge in activity as the upper middle class purchasers get more discerning due to the lack of subsidy from the eliminated deduction.
Park west Village is located between West 97th street and West 100th street, Central Park west and Columbus avenue. Each of the four buildings has just over 400 apartments, concierge, gyms, storage, children’s playroom, live-in-super and parking available. Average common charges and taxes combine for a very low $1 per square foot. Apartment sizes range from studios of about 540 sqft (50m2) start at about $800k, to 2 bedroom/2bathrooms of 1140 sqft(106m2)which start at $1.5 million.
According to The Real Deal the church at 361 Central Park west, which was once slated to be converted to condos was purchased by the Children’s Museum of Manhattan for $45 million. The site was purchased by the developer in 2014 for $26 million and after hitting roadblocks with the approval process to convert to condos, they decided to sell. The community will have a chance to be part of the approval and design process as the Museum will need to go through the city approval process as well.
If you are an international buyer looking for an investment property in the confusing Manhattan real estate market, there are many things to consider but here we have one simple tip. Consider buying in a new construction building that is tax abated.
A tax abated building will give you a higher rate of return of your investment due to the low monthly charges in comparison to a similar building without the abatement. A 20 year tax abatement will mean you pay probably around $100 or so per month instead of nearly $1500(at least). By year 12, the taxes begin to adjust upwards with each 2 year cycle the taxes going up as per the below.
Year 12 20% of fair market taxes
Year 14 40% of fair market taxes
Year 16 60% of fair market taxes
Year 18 80% of fair market taxes
Year 20 100% of fair market taxes
So for example a $3mm apartment with 2 bedrooms/2.5 bathrooms with common charges of about $1800 and 1300 sqft (120m2) of living space might rent for about $7000. With a tax abatement, your monthly return is about $5100 or $61,200 annually assuming taxes of $100 per month. Your rate of return is just above 2% on the $3mm investment. These would be the numbers for 50 Riverside boulevard aka One Riverside Park on Manhattan’s upper west side. Now if the building was not tax abated and you were paying $1500 per month in real estate taxes then your monthly return goes down to $3600 or $43,200 annual. The rate of return of approximately would be approximately 1.4%. Over the course of 10 years, the savings from a tax abatement would be approximately $170,000.
So if you are an international investor or even a local real estate investor purchasing new construction in Manhattan, take a look at tax abated buildings. Certainly, there are not a ton of them but they do exist and will increase your rate of return both now and long term.
Apartment 7K has entered the market and features just over 900 sqft with a 18 foot south facing terrace. Kitchen and bathroom were updated and crown moldings were installed. The South facing apartment receives tons of light and can be purchased by an investor or end user. It is currently rented out for $3400 per month.
The construction at 2230 Broadway the Friedland Properties building rising at the corner of West 80th street and Broadway on Manhattan’s upper west side is moving along. It will have 3 floors of retail on the lower levels and apartments above. It is unknown if it will be condos or rentals at this time.
Let’s say you are ready to purchase an apartment on the Upper West side with at least 3 bedrooms. Inventory is still on the low side. After doing a few searches on listing site streeteasy.com I came up with the below numbers. All of the below numbers indicate at least 3 bedrooms except where noted and the price range selected was between $3 – $4.5 million.
19 condos in the Lincoln Square section of the Upper West side
11 more listings in the UWS
8 listings with at least 4 bedrooms on the UWS
15 co-ops in Lincoln Square
9 co-ops UWS
5 co-ops on the UWS of which have at least 4 bedrooms
The range of offerings was from the luxury buildings on Riverside boulevard in Lincoln Square with tons of amenities to the Lincoln Towers co-op complex where your dollar goes further.
Only about 25% of the apartments in either co-op or condo segment up to $4.5 million had at least 4 bedrooms. Most new construction or recent conversions starts a little bit above this range.
952 Columbus avenue is already almost topped off. The 6 story building condo will have 15 units with a church on the ground floor. Listing site Streeteasy.com shows 11 units for sale and 9 in contract in less than 3 months. Affordable luxury sells and sells well. The units range in size from 1 to 3 bedrooms.
A high floor 1 bedroom/convertible 2 bedroom has entered the rental market. The 1 bedroom condo in the sought after 400 Central Park west condo has a 19′ terrace with southern views of Central Park and the Midtown skyline. There is plenty of customization in the renovation that took place and even an interior bedroom that can be a nursery. See the gallery below. Asking rent is $4000 and is available 3/1.
It started snowing around 10am but by 12pm it had stopped cold. No pun intended. Looks like an inch or less but there is still the prospect of some afternoon snow. Take a look at these photos taken early this morning in Central Park near West 100th street on Manhattan’s upper west side.
News about the NYC real estate residential and commercial markets provided and interpreted by an industry veteran licensed since 1999. Brian Silvestry of BSRG Inc. Licensed real estate broker