Investing in Manhattan: New York instead of Vienna

No New York visitor who leaves without a photo of the world-famous Chrysler Building. The 319 meter high tower with the distinctive peak, built in 1930, is an architectural icon. The media coverage was all the greater when it became known in March that René Benko had bought the skyscraper.
Far less known, Benko isn’t the first prominent domestic real estate investor to invest in the New York market. Conwert founder Günter Kerbler, industrialist Michael Tojner, Immovate founder Martin Kurschel and Norbert Winkelmayer, owner of the Vienna Philips House and the Hotel Sans Souci, have been buying apartments and houses in the nine million metropolis for over ten years. Billionaire Tojner has already bought four houses in Manhattan through his Wertinvest.

New York professional from Vienna

The contact point for many investors from Austria is Thomas Guss. Born in Vienna, he has lived in the Big Apple for 20 years. He started with the renovation and the purchase of apartments, now he runs New York Residence, a flourishing brokerage company with customers from all over the world. “The interest of professional investors from Austria has increased significantly”, observes Guss.

International investors are not uncommon in New York. The city, especially Manhattan, is a magnet for investors from all over the world. There are two main reasons for the popularity of the largest metropolis in the USA: The housing market is considered to be particularly stable in value, even in times of crisis, and an investment in dollars is interesting for everyone who does not only want to bet on the euro. “The American real estate market is neither cheaper nor easier to process or less bureaucratic, but it makes sense to diversify capital, and I wanted to invest in dollars. Of course, I’ll stay true to my core business, real estate. The construction costs are high, but the market in Manhattan is stable, ”says Günter Kerbler, describing his motivation for entering New York eleven years ago.

Unlike z. B. Florida, the New York market survived the US real estate crisis that sparked the financial crisis in 2008 without any problems. And after the financial crisis, prices rose sharply. The prices for condominiums – condos for short – in Manhattan have doubled on average from 1.6 to more than 3.4 million US dollars since 2009. However, the median is more meaningful (50 percent of the apartments cost more, 50 percent less). This rose from 1.2 to 1.8 million in 2017 and cooled down to 1.6 million by 2019. The price fluctuations are therefore stronger than in Vienna.

Important for foreign investors: In addition to condos, there is another – more common – type of apartment, the co-ops. While condos are comparable to our condominiums, with Co-ops the house belongs to all apartment owners in the form of a cooperative. The Co-op has extensive say. “You can z. B. reject the buyer of an apartment because the price is too low or the buyer does not fit into the community. Some also prohibit rental. You should therefore only invest in condos, ”advises Guss. While the price of condos has risen sharply since the financial crisis, that of co-ops has only increased slightly.

In any case, there is no lack of wealthy customers for the multi-million dollar condos. One million millionaires and ten percent of all US billionaires live in New York. There are also many foreign super-rich. “Of the ultra high net worth individuals – people with assets in excess of $ 30 million – almost everyone has an apartment in New York. It belongs to it like the private jet or the yacht. What counts for these buyers is that New York is the safest American city, ”says Guss.

$ 600,000 for a garconier

“New York is not a city for poor people. However, the people here also earn very well. The average household income in Manhattan is $ 200,000, ”said Guss. This is also necessary in order to be able to afford the purchase and rental prices that are unimaginable for Austrian standards. “A cheap garconier in Manhattan can be found from $ 600,000 to $ 700,000. For a two-bedroom apartment you can expect upwards of 1.8 million dollars. ”Most New Yorkers don’t buy, but rent. Here, too, you need the appropriate income. The median rent for apartments in Manhattan is currently between $ 3,300 and $ 3,500 a month.

The apartments are still in demand. “There is still a shortage of housing. The vacancy rate is three percent, ”said Guss. There is a large oversupply and strong price pressure only in the luxury segment. Megadeals like the one in January cannot hide this fact: hedge fund billionaire Ken Griffin bought America’s most expensive apartment for $ 238 million – a 2,000 square meter penthouse with an unobstructed view of Central Park. “Just recently, Amazon boss Jeff Bezos bought a penthouse for 80 million dollars,” Guss said at the GEWINN on-site inspection and emphasized: “The real top segment, in which money does not matter, always finds a buyer. But in the $ 10 million and above range there is too much interchangeable luxury. Here was built without worrying about the demand. “

Investment apartment in Manhattan

Norbert Winkelmayer, on the other hand, has given intensive thought to the demand for New York apartments. The Viennese real estate developer bought its first apartment in New York in 2003 and continues to see high demand in the “affordable” price segment, at least by New York standards. Two years ago, his Sans Souci Group and the Austrian fund manager Franz Hörhager bought a demolished house in Manhattan’s East Village near Tompkins Park. “A few years ago that was still a bad area, today it is one of the trendiest areas in the city, where many families also settle,” says Winkelmayer, who flies to New York every month. In September he wants to start building a house with twelve apartments. “All with a balcony – that’s rare in New York.” The 44 to 80 square meter apartments should be ready by 2021. At purchase prices between 1.25 and 2.5 million dollars. The target group are Americans and wealthy Austrians who want to invest in New York. Buying real estate in the USA is no problem for Austrians. But you do not acquire a permanent right of residence.

Winkelmayer wants to implement the concept of pension apartments known from Austria for his compatriots in Manhattan too. Makler Guss takes care of the rental and management on site: “We offer a so-called full management option and expect a pre-tax return of around 3.5 percent.”

High operating costs

In any case, a management that takes care of the rental on site is advisable. Buying an apartment in New York just for possible appreciation and not renting out because of the workload is not a good idea. The running operating costs are much higher than in Austria and quickly become a burden without rental income.

“Almost every house that is suitable for investors has at least a 24-hour doorman or someone who can be reached by telephone 24 hours a day, even if only if the toilet is blocked.” z. B. a fully equipped fitness room. In addition, there is the expensive property tax: “It depends on several factors and varies depending on the building,” says Guss, using a one-bedroom apartment with 70 square meters in Manhattan as an example. Property tax is $ 980 and operating costs are $ 1,000 per month. “In this case, an investment would not pay off. Therefore, you should definitely have the cost burden calculated before making a purchase, ”recommends Guss.

Austrians want to buy

The Austrian investors in New York definitely got a taste for it. “We want to do more housing projects of this size here in the future. The effort would be too great for just one project, ”says client Norbert Winkelmayer. Michael Tojner’s Wertinvest also says: “We are gradually expanding the portfolio and as a rule we do not sell. An expansion of the commitment through our current four projects is very likely. ”And apartment building king Günter Kerbler has not had enough of New York:“ I think that I will still acquire one or the other property. But rather outside of Manhattan, in Brooklyn or the Bronx. The price level doesn’t deter me. Given the steep rise in real estate prices in recent years, I shouldn’t be able to invest any more in Vienna. “

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