The relative ease with which wealthy people can access high-end housing in New York City has been around for a long time. However, recently a surge in luxury development in all of the five boroughs has created a situation where investing in real estate in New York City is the new thing to do. Unfortunately, there are construction implications to these new luxury projects that could threaten their success, and their ability to compete on a global market.
Luxury Is On The Rise In New York City
According to Bloomberg Business, 2014 was the first year that saw the luxury development of residential properties in New York City top the $7 billion mark as $11.9 billion worth of projects took place. That surge amounted to an increase of 73 percent in luxury residential spending in New York City from 2013 to 2014, and it shows how desperate developers are to build in the city.
Affordable Housing Is Not Keeping Pace
At the same time that affluent spending was on the rise in New York City, affordable housing development was down compared to previous years. This has caused the Mayor Bill de Blasio to express concerns that there is too much focus on luxury development, and not enough focus on building housing for middle class consumers.
In an interview posted on Bloomberg Business, New York City real estate expert Barbara Corcoran indicated that housing prices in New York City will remain high, but the idea of offering luxury housing side-by-side with middle class housing does help to keep overall costs down. If people are looking for affordable housing in the New York City area, Corcoran indicates that the chances of finding anything other than luxury housing is going to be nearly impossible.
Competing At A Global Level
TheRealDeal.com indicates that New York City’s luxury building boost could start to reap rewards on a global scale that could help to bring prices in the city even higher. When compared to other major cities around the world such as London and Hong Kong, New York City’s luxury real estate rental and purchase prices are almost half what people are paying in those other cities. But as luxury development continues in all five of New York City’s boroughs, investors around the world are starting to take notice.
As of 2015, Hong Kong commands the highest price per square foot in luxury real estate at $4,682. When compared to New York’s $2,586 per square foot, it almost makes luxury living in New York seem cheap. But as more luxury properties become available due to new construction in the Big Apple, those prices are expected to rise and give Hong Kong a run for its money.
Taking Advantage Of The Luxury Market
When the housing market melted down in 2008, investors were unsure about the future of luxury property investing. But, when New York City luxury property proved to be a stable investment in the face of uncertain economic times, there was an increase in investment that has spurred new construction. Now that demand is on the rise from investors around the world, New York City is looking to take advantage of a global luxury housing market that is ready to do things the New York City way.