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Investors keep a close eye on hot New York property market

October 2015

While there aren’t rumblings of an asset bubble in Manhattan property, prices are high, and some valuation metrics are at or near record peaks with sales activity at a record pace, industry experts say.

“There’s been a feeling around the last three or four years that this has become almost monopoly money. We’re awash in cash, the banks can’t lend out enough,” says a New York real estate investment firm.

Investment in New York City hotels already has set an annual record, while sales volume for commercial real estate – hotels, office buildings, retail space, land, industrial and multi-family dwellings – appears poised to surpass the boom year of 2007, according to data from CoStar Group.

Some may see a cautionary flag in the amount of money available to borrow, abetted in part by the Fed’s historically low interest rates. But higher rates won’t necessarily dent commercial real estate and experts say lenders are more disciplined now than the last cycle, when a housing bubble built on easy money burst in 2008 and spawned the Great Recession.

A limited number of properties for sale, particularly larger sites, has acted as a brake on transactions and helped to push up valuations, says JLL New York. “We might be at higher numbers if there were more product available,” says JLL.

Source: Reuters