NEW DELHI: They say the present is so powerful in New York that the past is often lost. Owning a slice of that present comes a tad cheaper these days, thanks to a general slowdown in the US realty market. Sure enough, money bags back home are taking note.
Indians now account for close to 20% of all realty sales in Manhattan, and 30% of all enquiries made, says Raphael De Niro, MD of New York's biggest property broking firm Prudential Douglas Elliman. "India and China are now replacing the buyers from Eastern Europe," he says.
Prices of residential apartments in Manhattan have slipped 20-25% off their peak in end-2007. Mr De Niro says he is currently negotiating with several Indian buyers who are public figures in India. Sales pitch for a typical Manhattan condo begins at Rs 3 crore-Rs 4 crore, less than what a South Mumbai apartment or a Mehrauli farm house comes for. Average price per square feet for a Manhattan East side condo is $1,249 while that for a South Central Mumbai apartment is $1,319.
"New York is now becoming what London was about 15 years ago," says Jaswant Lalwani, VP and associate broker at real estate firm Corcoran Group. He says the new enquiries for Manhattan condos mostly come from businessmen from the small and med-size segment, since most of the top league entrepreneurs already own property in New York. A few Bollywood stars too are latching on to the opportunity, two people in the sector told ET on condition of anonymity.
Mr De Niro, a former actor and son of Hollywood star Robert De Niro, however, wouldn't confirm any of the names that he is dealing with. According to realty firm Brown Harris Stevens, a luxury condo in Manhattan can be bought for $1.65-3.93 million, while a similar apartment in Mumbai will cost $3.3 million-$6 million. "Add to that the fact that the rupee has strengthened against the dollar, and you could have a killer on hand," says a Delhi-based rice trader who claims to be negotiating a deal.
A study on high net worth individuals (HNIs) by Bank of America Merrill Lynch and Capgemini last month said India's HNI population shrank 31.6% to 84,000 and its combined wealth declined 29% to $310 billion. However, the study said the numbers could bounce back this year with the stock market gaining strength since Indian millionaires park almost a third of their wealth in equities. Mr De Niro says that Indians prefer high-end Central Park condominiums. "Apart from Indians, there are a number of Chinese and other Asians too who are transacting for these properties," he adds.
Mr Lalwani says that that even if the property market falls by a further few percentage points in the near future, keeping a 5-10 years investment horizon could only mean gains. "Legally, any Indian filing tax returns can remit up to $200,000 every year out of his post tax income. A buyer in the US market usually pays 15-20% of the cost of the property upfront and the rest is mortgaged," says Prashant Kaura, director at GenReal.
Mr Lalwani says he has got 20 serious enquiries from India over the past 3 months of which 10 have been converted. "The remaining buyers are in varying degrees of decision making. Indians are looking for value, location and resale potential. There are a lot many more enquiries but many of them are just doing homework," he says.
According to a Q3 2009 Manhattan Market Overview by Mr De Niro's Prudential Douglas Elliman, in the condo market, all price indicators showed double digit decline when compared with the previous year quarter. The median sales price of a Manhattan condo was $1,015,124, down 16.8% from $1,220,000 in the same quarter last year, but was up 1.6% from the last quarter price of $999,000.
This shows that property prices have bottomed out that explains the sharp rise in sales in the last one quarter. While the number of listings of condos in Manhattan slipped a modest 0.6% to 4,549 units from previous year quarter total of 4,575 units, it saw a sharp drop of 8.6% from last quarter's total of 4,979 units.