Wednesday, May 09, 2007

An Irish Taste for Real Estate in Manhattan / NYT

rolling bubble, buying a less overinflated asset, currency risk, buying unseen, multiple apartments..........what a concept.

bleibt zu hoffen das der blase die luft ausgeht bevor sie deutschland erreicht hat.........

They live an ocean away, but that has not stopped the Irish from lining up to buy condominiums in Midtown Manhattan, often years before they are built.

In some cases, entire buildings or large blocks of apartments in unfinished high-rises are being sold to Irish investors hungry to own a piece of New York City.

Neil McCann, an entrepreneur in Belfast, joined the rush of would-be Manhattan landlords last year when he said he signed a contract to buy a one-bedroom apartment near Gramercy Park for $600,000. ....

With a weak dollar, Mr. McCann said, the New York apartments are relative bargains compared with real estate in Ireland and Britain.....

The buyers do not even have to travel to New York, because the sellers are coming to them. Armed with glossy brochures about amenity-laden towers, New York brokers like Anne Marie Moriarty, of the Corcoran Group, have been dropping in to Dublin and Belfast and taking deposits.

“Most of these people are buying one or two apartments at a time,” said Ms. Moriarty, who has specialized in selling to the Irish for about two and a half years.

“Many of them buy off plan, because they’re fearless,” she added, referring to the custom of putting money down on apartments long before they are completed.....

“Because of the weak dollar, we’re seeing a lot of European buyers and it just seems like there’s a disproportionate amount from Ireland,” said Jonathan J. Miller, president of Miller Samuel, a real estate consulting company......
“Bar none, the No. 1 investment strategy for an Irish person is through property,” Mr. McGinley said. “Your average Joe on the street has probably got two, three, four, five residential assets. It’s considered to be a safe play.”

To them, an apartment in the center of Manhattan, no matter if it measures only 800 square feet, is a “trophy asset,” Mr. McGinley said.

“The amount of money floating around over here is just phenomenal,” said Bryan Turley, Sorrento’s chief executive. “At some stage it has to leave the island. If you follow where Irish money is going, a good deal of it is going into property.”

At the heart of this investment surge lies some simple math, brokers said. With the dollar at historically low levels against the euro and the British pound, apartments generally cost less in Manhattan than in Dublin or London. But they still rent for more in Manhattan.

“Even if they could afford to buy in Dublin,” Ms. Moriarty said, “they could not get rent anywhere near what they get here.”

Kevin Harmon, a broker with Savills Hamilton Osbourne King, a real estate company in Dublin, used the example of a luxurious one-bedroom apartment in Manhattan that would sell for $900,000, equivalent to about 665,000 euros.

“For 665,000 euros, you’d buy a very nice two- or three-bedroom apartment in a good development” in the Dublin area, Mr. Harmon said. But the rent on the apartment in Dublin would be about 2,000 euros, or $2,700 a month, while the place in New York would rent for about $4,000 a month, he said......

Now, with the Irish property market cooling after a long, steep run, he added, “People feel there is better opportunity for capital appreciation there.”
>brings back memories from the nasdag/tmt bubbel when the advice was to sell tech to buy media , sell media to buy internet, sell amazon to buy yhoo etc........ in the end all assets were overinflated.......
>bringt bei mir erinnerungen an die wilden nasdag zeiten zum vorschein wo im wochenrhythmus empfehlungen kamen tech in medientitel, medien in internetaktien und amazon in yhoo und umgekehrt zu tauschen.... im endeffekt waren alle assets völlig überteuert......

To experienced property buyers like Mr. McCann, investing in real estate almost anywhere sounds safer then buying stocks on the exchange in Dublin or London. Mr. McCann, who said he had never owned a share of company stock, said he largely agreed with Mr. McGinley’s view that trusting one’s retirement to the vagaries of the financial markets would be “utter madness.”
Irish newspapers feed the obsession with weekly sections filled with articles about far-flung markets. A recent edition of The Irish Times carried one article about buying apartments in Sofia, Bulgaria.

By comparison, Manhattan, with a well-established set of rules for buying and selling apartments, appears to be an island of stability, Mr. McCann said.

“It’s not like you’re investing in old Communist countries where landowners have only recently received title to their property,” Mr. McCann said.

Still, not everybody in the real estate business in Manhattan sees it as a sure thing. William Fegan, a partner with a real estate development company, Tribeach Holdings in New York, said he feared that many Irish buyers were too focused on the potential rental income and not enough on all of the other costs of owning an apartment in New York.

“For the life of me I haven’t been able to figure it out,” Mr. Fegan said. “If I was to advise them, I’d probably tell them not to do it. Carrying an apartment in New York City is an expensive proposition.”

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5 Comments:

Blogger Duplex said...

When the Irish start buying you know its time to sell, and sell quickly.

4:07 AM  
Blogger jmf said...

hi duplex,

all the spreading/rolling is for sure a signal that the end is near....

just from watching the banner ads on several blogs/websites now trying to promote exotic/overseas properties it feels that the greater fool game is coming to an end......

5:38 AM  
Anonymous Gary said...

This is pretty amazing. Its also a good investment for them (the Irish who have the money). More power to em. For those of you in the real estate industry or those who are house hunting, have you heard of Bought & Sold on HGTV? It’s a show about the inner workings of the real estate business. It basically shows 12 different agents trying to show houses and close the deal. It gives you huge insight into the way homes are marketed and how price levels are decided upon in the Northern New Jersey market. You can check out a preview - http://web.hgtv.com/webhgtv/images/pac/59889/start_at_home.html?section=boughtsold,panel=videos - It’s on Sundays at 10PM e/p time on HGTV. I work with them so this is how I know all this info. Highly recommended, check it out.

12:14 PM  
Blogger Duplex said...

Hi jmf guten tag.

The domino effect has started. First Spain down 15-20% along the Costa's. Rural French property is also suffering. Bulgaria especially Black Sea coast is a disaster, Turkey not much better. Dubai leaves me speechless. The Irish domestic market is well ... kaput.
It's curtains for the great property bubble.

4:10 PM  
Blogger jmf said...

guten tag duplex,

yes.

the cracks are coming faster and faster..

and even the biggest property stock in germany is suffering....

http://aktien.onvista.de/snapshot.html?ID_OSI=15301425

owner is the fortress a big hedge private equity group (fig) in the
us.......

8:56 PM  

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