“The market is slowing down, the prices of the old are stabilizing”

A specialist in the New York market for Barnes, Yann Rousseau gave a series of conferences in France on investment opportunities in “The Big Apple”. At the microphone of Ariane Artinian, he travels through New York neighborhoods, takes stock of the slowdown in the market in Manhattan, current prices and investment opportunities in new programs. Selected excerpts.

Yann Rousseau : In a context of a sharp slowdown in American economic activity, the market remains very solid despite a drop in the number of transactions and requests. This means that the market adjusts with a stabilization of prices rather on the rise. This is a particularity of the New York market: as soon as there is a contraction in the market, the New York owner in the old building is rarely in a hurry to sell and can afford to wait for better days to sell.

Yann Rousseau : We expect a recession in 2023 that would be weak both in intensity and duration. The FED (American Federal Bank) has sharply increased its key rates to fight inflation, which means that, mechanically, borrowing rates have doubled in 2022 with, as a consequence, a fall in stock market valuations, many layoffs in the technology sector and real estate companies, in particular.

Mon Podcast Immo: Until when can prices hold up with falling volumes?

Yann Rousseau : If we look at the New York real estate market for decades that have been crossed by crises, the market remains constantly increasing, by 2 to 3% per year. Since the end of the covid-related pandemic, prices have thus risen.

My Realty Podcast: What are the most popular New York neighborhoods and what are the prices?

Yann Rousseau : Currently, the most expensive is Hudson Yards which includes only new programs. In fashionable districts, or “village districts” which are far from tourist areas, we find in particular Tribeca which has been the most valued in recent years, as well as Soho et West Village, with small buildings and townhouses. Historically, we remain close to Central Parkwith a concentration of the most luxurious buildings in Midtownon the 57^e Street. The coastal part of Brooklynthe closest to Manhattanstill doing well.

Regarding prices, for new buildings, we are around 20,000 dollars per square meter or even up to 40,000 dollars for the most sought-after areas; in the former, prices range from $15,000 to $25,000.

Mon Podcast Immo: At these prices, are French investors interested?

Yann Rousseau : Yes, because the best opportunities currently are in the new. The new programs have a different logic because they do not have the possibility of waiting for the market to recover, they have financing and regulatory constraints with the city and the State which oblige them to settle their inventory. These market opportunities should not last more than one or two semesters.

Mon Podcast Immo: Does this mean that it is possible to obtain discounts?

Yann Rousseau : Historically, new programs are not traded

In the old New York, we negotiate little, around 5% in the best case, and in the new, we can go at least up to 10%. Regarding the very popular neighborhoods, everything depends on the use you want to make of your property. Regarding new programs, exemption from property tax is granted to certain buildings in certain districts for fairly long periods (25 years). In the event of resale, this exemption remains attached to the property. The entry ticket is around 1 million dollars (700,000 to 800,000 for a studio).

Mon Podcast Immo: What is the profitability and the expectation of capital gain?

Yann Rousseau : New York’s profitability must be conceived of in two ways: rental profitability, of the order of 3%. At the moment rents are very high and there is no rent control for investors. As for the valuation of the property, smoothed over several years, is 3% on average.

Mon Podcast Immo: What is the profile of buyers?

Yann Rousseau : We have the individual rental investor, the customer who makes a pleasure purchase with less dynamic profitability and the institutional customer who buys apartment buildings or large apartments.