Thursday, November 12, 2015

New York... A simple case of supply and demand.

The Inside Story this week is coming to you from Manhattan, New York City! Genevieve and I are in NYC to attend the World Business Forum Conference at the Lincoln Center with headline speakers, Sir Richard Branson and Kevin Spacey (a huge thank you to NOVA Entertainment for this amazing opportunity!).

Exploring the streets of SOHO, East Village and strolling the beautiful tree lined streets of the Upper East Side, residential property in Manhattan is so intriguing.

Bordered by three rivers - the East, Hudson and Harlem, Manhattan is the text book case study of economics, restricted supply and significant demand.

Of the 8.4 million people that call New York City home, 1.63 million New Yorkers choose to live in Manhattan, a total land size of only 59 square kilometres. This area creates an amazing and unique mix of culture, business, tourism and history, unlike any other city in the world.

But it also has an affect on property demand. A staggering 99% of the apartments and homes available for rent across Manhattan are occupied (according to The Guardian).

This is having a significant impact on pricing across the city. According to the Manhattan Rental Market Report for September 2015, a two bedroom apartment in Tribecca, the most sought after rental suburb right now, achieves average rents of USD$1,895 per week and a two-bedroom rental in SOHO and Greenwich Village sits around USD$1,203 per week!

These are huge dollars... any way you dice it. To put it into perspective, locally in South Australia, a two-bedroom property in Norwood (the most searched suburb in SA according to realestate.com.au) achieves an average of $385 per week.

So if I had $500 per week to spend in a trendy part of Manhattan, I would find myself in a 
37 square metre studio apartment with basement, or non-existent, laundry facilities.

In an equivalent, popular suburb in Adelaide, I would be in a two storey, 223 square metre townhouse with three bedrooms, two bathrooms and two car parks... not to mention the sensational penthouse apartment we currently have for lease for $1,600 per week in the Air Apartments. It's 434 square metres of absolute luxury with views of the city... for the same price as a unit in SOHO?

This is incredible. 

It's no wonder apartment prices become the topic of conversation when New Yorkers and Australians get together. They simply cannot fathom the level of accommodation we have available to us.

Manhattan is an extreme example, but investing well and picking the next hot spots, always comes back to the laws of supply and demand.

No comments: