Manhattan’s ultra-luxury residential market, defined as the top 10% of closings in a given year, has been appreciating much faster than the overall sales market for more than a decade, with historic landmark buildings leading the price gains, according to a StreetEasy report released Friday.
From 2005 to 2017, median prices of the most expensive 10% of sales rose at 8% per year, much faster than the average 5% annual growth rate of all Manhattan real estate over this period, according to the report, which didn’t provide the absolute values of median prices.
StreetEasy, part of real estate marketplace Zillow, compiled closing sales data from New York City’s finance department. The site chose to compare those two years because 2017 is the most recent year with full data, and the city began to include co-op buildings in the data in 2005.
To make it into the top 10% of sales, an apartment had to sell for at least $4.2 million in 2017, while the threshold for ultra-luxury in 2005 was $1.9 million.
"These years represent a boom in ultra-luxury housing, one fueled in part by wealthy foreigners who looked to New York real estate as a safe investment," said Nancy Wu, economic data analyst at StreetEasy.
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While new developments, those built no more than two years ago, typically make up the largest portion of the ultra-luxury market in any given year, they tend to lose their status over time, according to the report.
Out of the 23 new developments that occupied the ultra-luxury market in 2005, only four, or 17%, were still included in the 2017 list. The four buildings are One Beacon Court at 151 East 58 St., Time Warner Center at 25 Columbus Circle, The Metropolitan at 181 East 90th St., and The Heritage at Trump Place at 240 Riverside Blvd., according to StreetEasy.
By comparison, 49% of the historic buildings that sold within the ultra-luxury tier in 2005 remained in the category in 2017, meaning there was at least one sale in these buildings that made it into the top 10% of the market.
StreetEasy defines historic buildings as those the NYC Landmark Preservation Commission deems to have cultural or aesthetic value to the city’s heritage, such as the Dakota, the San Remo, Sherry Netherland and The Pierre.
The different performances between new developments and historic buildings could be attributed to two factors—reputation and competition, Ms. Wu said. "Wealthy buyers all want to own a piece of New York history. Once a historic apartment comes onto the market, the price will be pushed up," she said.
Meanwhile, new condo buildings simply fall out of the top tier as they age and are replaced with even newer condos with more appealing and higher-end amenities, Ms. Wu said.