Desperate sellers whose luxury homes have been languishing on Manhattan’s real estate market for almost a year may soon receive a bit of respite after the Brexit vote.
While there will be some international investors looking to take advantage of the tumbling pound and pick up a bargain in London, others will want to look at cities that they deem to be safer investments, such as New York, where sellers have been struggling to find a buyer amid a glut of luxury homes on the market and global economic uncertainty.
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“There is some benefit to the super luxury segment since London as a competitor is probably off the table for many global investors,” said Jonathan Miller, the chief executive of appraisal firm Miller Samuel, although he stressed that this won't be a panacea. “New York super luxury remains challenged by over supply – with more supply coming – but it’s still a better outlook for the market, if only a nominal amount.”
Sofia Song, executive vice president of data & research at Douglas Elliman Real Estate, added: “There will likely be an increased interest from foreign buyers looking for safe havens, particularly in real estate, and the U.S. markets provide this. New York, will also be more fully regarded as the financial capital of the world, which could also benefit the luxury market.”
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Any kind of pick up in the New York market is good news to sellers. Recent figures from Olshan Realty found that sellers have been forced to cut prices by an average of 11% from the original asking price, with the average property on the market for a lengthy 311 days.
However, while most predicted that the city would receive a boost from international investors, there were mixed views about British buyers, with Ms. Song predicting that the fall in the pound would result in fewer British buyers. In contrast, Stuart Siegel, chief executive of Engel & Volkers, argued that some may consider it as a good hedge if there will be further material devaluations in the pound.
Victoria Shtainer, an agent at Compass, told Mansion Global that she had already had inquiries from four of her British clients who already have a small second home in the city but are now considering a permanent move.
“They are very shaken to say the least,” she said. “As much as New York and London were head to head in who’s the number one city and where people want to live, I think because what happened yesterday New York is number one.”