Take a bite of the Big Apple
NEW York is one of property experts' top market picks for 2011, but how does it compare to other global hotspots and what exactly should investors buy?
IP Global, the property investment firm, recently analysed the cost of housing and the rebound from rock-bottom prices in London, New York, Moscow and Hong Kong.
It found that Hong Kong, having peaked and then troughed in mid-2008, has come back with a vengeance over the last 12 months.
In comparison, the London market started tumbling in mid-2007 before recovering slowly in late 2008. Meanwhile, the Moscow property market dived earlier and returned to some strength in late 2009.
Overall, though, the New York property market looks like the best value, according to Tim Murphy, founder and chief executive of IP Global.
"It's interesting to see the correlation between these countries and the speed with which Hong Kong, as a barometer of Asia, has bounced back," he says.
"However, New York is still coming out cheaper on average for a city centre apartment than London, Hong Kong or Moscow."
Supply levels in New York have been tightening, with no new developments built in the last two years. The large amount of capital available and diminishing supply makes New York a "very attractive market", according to Murphy.
He says: "That's why we have been bullish on New York for a good six months now. The economy and property market have reacted positively to the economic stimulus programs and there has been substantial recovery during 2010 and already an increase in the volume of purchases in New York and New Jersey."
Where to invest
Jersey City, located across the Hudson River from Manhattan, is an alternative play on New York: here, you need a lot less money to invest.
Why you might be forced to fork out $700,000 or a cool $1 million to snap up a property in New York, somewhere like Jersey City, which is a stone's throw from Manhattan's city centre, is a lot more affordable.
At developments such as The Saffron, just seven minutes from the World Trade Centre (WTC), it costs around $300,000 for a one-bed apartment in a new build with good amenities. In New York, an equivalent apartment would fetch north of $1m and the commute to the WTC is quicker from The Saffron than from Central Park.
"The yields are also better than New York – up to 7% – and it's a good play on a currently undervalued market without having to worry about investing a large amount of capital," adds Murphy.
"New York and Jersey City both present strong cases for investment achieving different investment objectives. Jersey City appeals to investors seeking a high yielding investment and who would like to gain a foothold in the New York Greater Metropolitan Area, while New York is a capital investment play attracting investors who would like to capitalise on the rebound of the New York property market."
Pic credit: luigi diamanti/ FreeDigitalPhotos.net
Are you a property investor? What are your top investment tips? Tell us...