Irish investors biting in the Big Apple

A falling dollar and a rising market are attracting Irish investors to the Big Apple, reports Conor O'Clery in New York

Irish property buyers who have been investing in European cities are now turning to the United States and in particular to New York.

The fall in value of the US dollar has made properties here considerably cheaper for holders of euros. Also in Manhattan the value of houses and apartments have been relatively stable and in some areas property prices are now taking off.

The city's economy has at last fully recovered from 9/11 and the number of foreign visitors is rising for the first time in five years. Employment is growing, too, commercial vacancy rates are down, the tourists are back, and there is a new sense of excitement and vibrancy about the Big Apple.

Salary bonuses generated by Wall Street traders and executives - totalling $15.9 billion in 2004 (around €12.195 billion) - have given the property market a boost after being stable for much of last year, says Barbara Weinstein, vice president of Halstead Property Company.

The new wave of foreign buyers is also pushing prices up. All of which makes Manhattan very attractive for investors. "Because of the deflation of the currency, Irish people who are coming to work in Manhattan on a part-time basis are buying apartments," says Declan Kelly, head of Financial Dynamics in downtown Manhattan. "The fact is that a 2,000 sq ft (186 sq m) apartment in Manhattan can be cheaper than a 2,000 sq ft (186 sq m) apartment in Dublin."

Luxury apartments have increased in value by 45 per cent in the last five years, despite 9/11. The average price of a Manhattan apartment in the last three months of 2004 was $1.04 million (around €797,530), up by 15 per cent from the same quarter the previous year. According to Halstead's monthly report, the median price rose 35 per cent during last year to $675,000 (around €517,550).

Some of the most prominent Irish buyers have been causing a stir in the New York property pages for some time. Riverdance director John McColgan traded up to an 18th floor penthouse on Madison Avenue last year, paying $5.5 million (around €4.216 million) for the four-bedroom, 353 sq m (3,800 sq ft) residence with marble baths and wood-panelled library, according to city records.

Bono has a $3.5 million (around €2.682 million) apartment on the Upper West Side, as has Adam Clayton, and Bono has been trying to increase his property holding. The U2 singer and his wife, Ali Hewson, bid for Steve Job's $14.7 million (around €11.267 million) triplex on Central Park West last year but a rival got in first.

Private Irish investors are expected to close on two big Manhattan properties early in 2005, according to Crain's New York Business magazine, and Anglo Irish Bank recently acquired a tower building on East 41st Street for $210 million (around €160.967 million).

William Shanahan, a CB Richard Ellis executive vice president representing sellers in deals with Irish buyers, told Crain's that "in the past few years, the Irish have been buying in the European capitals, and now they're turning to the United States".

Australian, British, French, Italian, Irish and Japanese buyers are, in fact, closing out New York's established real estate investors. For those looking for a pad in Manhattan, apartments in the best locations generally range in price from $500,000 (around €383,226) studios to $10 million (around €7.665 million) lofts and condominiums.

Top price last year for a Manhattan apartment was paid by media tycoon Rupert Murdoch who acquired a 20-room three-floor penthouse in an exclusive co-operative overlooking Central Park for $44 million (around €33.727 million).

It is sometimes difficult for an out-of-town buyer to acquire a co-op apartment as the owners may have rules about foreign residents - even Mr Murdoch couldn't close the deal until he had been approved by the building's co-operative board - so overseas buyers usually go for a condominium, basically a piece of property in a large building, says Barbara Weinstein.

At the more modest end of the market it is difficult to find anything cheaper than $400,000 (around €306,626) in the best locations.

Buyers can find studio apartments, typically with one or two rooms and bathroom, in the $400,000 to $750,000 (around €306,626 to €574,851) range, she says.

Brokers advice foreign clients planning to acquire a property in New York for personal use to look in mid-town or the Upper West Side for best long-term value. The Upper East Side is also very desirable and just a short distance from theatres and mid-town's facilities. The most desirable residences are on the Upper West Side, but the supply of apartments here is low.

While most New York flats have small conventional windows, sleek glass facades are fast becoming a must-have for buyers with over $1 million (around €766,602). They are appearing everywhere but especially along the Hudson south of mid-town and downtown.

A new 250-apartment condominium on Chambers Street and a 551-unit building on West 42nd Street will both be fronted by an expanse of glass. For some residents of a new glass tower on Perry Street, however, the novelty quickly wore off when leaks developed.

Downtown is experiencing a property boom, with new listings going up 19 per cent. The most desirable Manhattan lofts are found downtown in converted warehouses. At a median $867 per sq ft (around €665 per sq ft), lofts were 30 per cent more expensive in December than a year ago. Big financial firms like Morgan Stanley that fled after 9/11 are coming back and there has been a rush of residential activity.

New apartment blocks have gone up in Battery Park City and office blocks in the Wall Street vicinity are being converted into apartments and studios. Downtown has long been shunned because of its reputation for empty streets at night but this is changing. Fancy stores and restaurants are opening and the tipping point for 24-hour activity cannot be far away.

One thing that potential investors in Manhattan real estate should be aware of, brokers point out, is the monthly costs of owning an apartment.

This includes maintenance charges which go towards such expenses as doorman, hot water and garbage disposal, and also city tax. For example, a $499,000 (around €382,519) studio apartment of 38.2 sq m (412 sq ft) in a 49th Street building currently on the market will cost the owner $497 (around €381) a month maintenance and $316 (around €242) a month tax, a total of $813 (around €623) a month.

A slightly-less expensive studio on East 65th Street has total common charges of $539 (around €413). And anyone willing to pay $9.5 million (around €7.28 million) for a 279 sq m (3,000 sq ft) apartment on the 53rd floor of a West 67th Street building will have to pay a monthly common charge of $3,900 (around €2,987).