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Company Overview & Marketing Capabilities Presentation
Manhattan & Miami market fundamentals Heather McDonoughSenior Vice President, Prudential Douglas Elliman
Another Brick in the USA?Andamento del mercato immobiliare USA, opportunità d’investimentoMilano, 24 maggio 2012
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TABLE OF CONTENTS
I. Macro Economics Factors
II. The Manhattan Market
III. The Miami Market
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MACRO ECONOMIC FACTORS
I. Historically Low Interest Rates
I. US Dollar Attracting International Purchasers
II. Low Foreclosure Rates
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HISTORICALLY LOW INTEREST RATES
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US DOLLAR ATTRACTING INTERNATIONAL PURCHASERS
USD/€ Exchange Rate Over 6 MonthsNov 4, 2011 – May 1, 2012
Source: Oanda.com
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US DOLLAR ATTRACTING INTERNATIONAL PURCHASERS
Contributing to international purchasers decision making process on buying US properties
are the concerns about the weakening Euro.
“2012 Predictions – The Euro will reach parity with the U.S. Dollar” – CNBC’s Brian Sullivan
With indications that the Euro is falling apart-- the crisis in Greece, poor economic
conditions in Italy and Spain, the US is perceived as a safe and secure place to invest.
Despite global uncertainty, the US avoided succumbing into another recession and in 2011
GDP grew by 1.7%, producing nearly 1.6 million jobs.
According to DTZ Research, an estimated $329.0 billion in capital was raised to directly
target global real estate in 2011, with 33.7 percent ($111.0 billion of capital funneled to the
United States.)
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MARCH 2012 U.S. FORECLOSURE RATE HEAT MAP
Source: RealtyTrac.com
FORECLOSURE ACTIVITY COUNTS MARCH 2012
California 45,122Florida 26,758Texas 8,228New York 2,151NY, NY 52
Total number of households receiving foreclosure filings during the month.
LOW FORECLOSURE RATES
THE MANHATTAN MARKET
KEY MANHATTAN SUBMARKETS Upper East Side Upper West Side Midtown Downtown
• West Village• Tribeca• SoHo• Flatiron• Chelsea• Financial District
NEW YORK CITY NEIGHBORHOODS
I. World-Class City and Financial EpicenterII. Undervaluation of NYC PropertiesIII. Diverse City with Fluid PopulationIV. Strong Demand ContinuesV. Appeal of Investment Properties / Strength of
Rental MarketVI. Composition of Housing StockVII. Restricted Future SupplyVIII. Positive Outlook - Blue-chip CommodityIX. Emerging neighborhood
MANHATTAN STABILITY FACTORS
WORLD-CLASS CITY & FINANCIAL EPICENTER
To gauge which cities are considered the most important to the world’s HNWIs, The Wealth Report surveyed Citi Private Bank’s wealth advisors around the world and Knight Frank’s global network of luxury property specialists.
CITI POWER & NEW WORLD ORDER
NEW YORK RANKS:ECONOMIC ACTIVITY #2KNOWLEDGE & INFLUENCE #2QUALITY OF LIFE #3POLITICAL POWER #3MOST IMPORTANT GLOBAL CITY #2
UNDERVALUATION OF NYC PROPERTIES
AVERAGE PRICES 4Q 2011
Source: Knight Frank’s Prime International Residential Index
Currency calculations based on rate prevailing on 12/31/2011
UNDERVALUATION OF NYC PROPERTIES
I. As noted previously, NYC ranks as the #2 City for Economic Activity, Knowledge & Influence and Global Importance & #3 for Political Power and Quality of Life.
I. With this in mind, it is shocking to see Manhattan ranking #17 at €18,000/SM ($2,200/SF). This pricing is actually the top 2% of the luxury segment as the average price per square foot in Manhattan in 1st Quarter of 2012 was actually approx. $1,086/SF or €9,222/SM.
I. The latest update of The Economist’s global house-price indicators reveal that New York properties are currently undervalued, providing incredible mid-long run investment opportunities. “Fair value” is defined in terms of long-run average of 2 measures: the price-to-income ratio (gauge of affordability) and the price-to-rents ratio (gauge of equity value).
DIVERSE CITY WITH FLUID POPULATION
2011 Census New York City Key Findings:
• Estimated Population 2011: 8,175,133 (YTY 2.1% growth)
• Foreign Born Persons: 36.8%• Language Other than English Spoken at Home:
48.3%• Demographic: White (44.0%, Black 25.5%,
American Indian 0.7%, Asian 12.7%, Hawaiian 4.0%, Hispanic/Latino 26.6%, Multi-race 4.0%)
• Home to more than 800 Languages
DIVERSE CITY WITH FLUID POPULATIONConstant Movement in the Market Despite Prevailing Economic Conditions
I. Financial services sector constantly moving in and out from broad. II. High percentage of international buyers interested to relocate, purchase second
homes/investment properties, family home to send children to universityIII. Life happens– Marriage, Divorce, Expanding Families, Empty Nesters
STRONG DEMAND CONTINUES
MANHATTAN CONDOS
Source: Elliman 2002-2011 Report
STRONG DEMAND CONTINUES
I. Some market segments out performing 2007-2008 levels: 166 Perry, Unit 2C: 2010 Sold Price: $2.215m 2012 Sold Price: $3m (35% gain)
(Our sale)
7 Hubert Street:Unit 7A: 2007 Sold Price: $4.25m 2010 Sold Price: $7.5m (76.5%
gain)
15 Central Park WestPH20: 2007 Sold Price: $43.7m 2012 Sold Price: $88m (101%
gain)28D: 2008 Sold Price: $8.98m 2012 Sold Price: $21m
(134% gain)
II. Transaction Volume 2011 – 10,161 Transactions (6.9% increase) 2002 – 9,509 Transactions
APPEAL OF INVESTMENT PROPERTIES / STRENGTH OF RENTAL MARKET
Source: Miller Samuel
Rental Vacancy and Average Rents
I. Vacancy rates remain low hovering around 1%.II. In the first quarter of 2012 the average rental price per square foot of $52.57 has reached its
highest level since the credit crunch began in the third quarter of 2008.
APPEAL OF INVESTMENT PROPERTIES / STRENGTH OF RENTAL MARKET
Source: Miller Samuel
0
2
4
6
8
10
12
0
2
4
6
8
10
12
AVERAGE CONDO PRICE PER SQUARE FOOT / AVERAGE RENTAL PRICE PER SQUARE FOOT
Sale PPSF
Renta
l P
PSF
COMPOSITION OF HOUSING STOCK
I. 62% of the housing stock in Manhattan is rental inventory and 38% is privately owned Condo & Co-op.
II. Of the 38% that is privately owned, a large percentage is rented making the actual percentage of residents renting in Manhattan somewhere between 70-75%. This is the largest rental to own ratio in the country.
COMPOSITION OF HOUSING STOCK
CO-OP & CONDO
CO-OP In NYC, 85% of all apartments for purchase are co-op (almost ALL prewar
apartments are co-op) You don't own any REAL PROPERTY, you own shares in corporation that
owns the building Advantages: Less expensive, percentage of maintenance fees are tax
deductible Disadvantages: Prospective purchasers and renovations must be "board
approved," generally higher down payments required, limitations on subletting/renting, restrictions on pied-a-terres and parents buying for children
CONDO Condos are REAL PROPERTY, with its own deed and tax bill Advantages: Greater flexibility, financing restrictions less stringent, less
red tape for board approvals, few limitations on renting/subleting, lower monthly maintenance fees, some condos have tax abatements
Disadvantages More expensive, monthly maintenance fees are not tax deductible
RESTRICTED FUTURE SUPPLY
Source: UrbanDigs.com
MANHATTAN ACTIVE VS. PENDING LISTINGS 1/1/2008 to 5/1/2012
RESTRICTED FUTURE SUPPLY
I. Low Level of Inventory I. 2011: 7,221 Active ListingsII. 2001: 7,506 Active Listings
I. Manhattan is an Island so no room for growthII. Not many development sites left to buildIII. New Building Applications in Manhattan Recorded by the Department of Buildings (DOB):
1/2011: 4 1/2010: 21/2009: 2 1/2008: 181/2007: 17 1/2006: 24
POSITIVE OUTLOOK / BLUE-CHIP COMODITY
“Manhattan housing prices and sales activity have remained stable for the past three years, despite the general economic turbulence”
- ELLIMAN 2002-2011 DECADE REPORT
LOWER MANHATTAN
EMERGING NEIGHBORHOODS
• Lower Manhattan’s total inventory 28,775 units in 316 buildings• 6 additional buildings are in the pipeline and scheduled for completion by 2013• Population grew in 2011 to an estimated 57,000 residents and is expected to reach 60,000
residents in 2012 and 61,600 in 2013• Population is affluent and well educated. 85% have graduate degree and 42% have done post-
grad work. Average household income is $188,000/yr.
DOWNTOWN CONDOS
EMERGING NEIGHBORHOODS
• Average Price Per Sq. Ft: $1,240 (2011) $635 (2002) 95.3% Chg
• Number of Sales: 2,221 (2011) 1,380 (2002) 60.9% Chg
WEST VILLAGE/GREENWICH CONDOS
EMERGING NEIGHBORHOODS
• Average Price Per Sq. Ft: $1,642 (2011) $833 (2002) 97.1% Chg
• Number of Sales: 156 (2011) 162 (2002) -3.7% Chg
SOHO/TRIBECA CONDOS
EMERGING NEIGHBORHOODS
• Average Price Per Sq. Ft: $1,379 (2011) $709 (2002) 94.5% Chg
• Number of Sales: 377 (2011) 154 (2002) 144.8% Chg
FINANCIAL DISTRICT
EMERGING NEIGHBORHOODS
• Average Price Per Sq. Ft: $987 (2011) $478 (2002) 106.5% Chg
• Number of Sales: 343 (2011) 7 (2002) 4800.0% Chg
CHELSEA CONDOS
EMERGING NEIGHBORHOODS
• Average Price Per Sq. Ft: $1,303 (2011) $639 (2002) 103.9% Chg
• Number of Sales: 345 (2011) 190 (2002) 81.6% Chg
THE MIAMI MARKET
KEY MIAMI SUBMARKETS Miami Beach Fisher Island Downtown Miami Key Biscayne Brickell Coconut Grove Coral Gables Bal Harbour Sunny Isles Aventura
MIAMI NEIGHBORHOODS
MIAMI MARKET FUNDAMENTALS
I. World-Class City II. Lat-Am Financial GatewayIII. International ComponentIV. Strong Demand ContinuesV. Bargain Investment PropertiesVI. Strong Second Home Market VII. Restricted Future SupplyVI. Positive Outlook
MIAMI MARKET FUNDAMENTALS
WORLD-CLASS CITY & FINANCIAL EPICENTER
To gauge which cities are considered the most important to the world’s HNWIs, The Wealth Report surveyed Citi Private Bank’s wealth advisors around the world and Knight Frank’s global network of luxury property specialists.
CITI POWER & NEW WORLD ORDER
MIAMI RANKS:RICHEST CITY #4MOST IMPORTANT CITY #6QUALITY OF LIFE #9KNOWLEDGE & INFLUENCE #16POLITICAL POWER #17ECONOMIC ACTIVITY #15
INTERNATIONAL COMPONENT
Miami-Dade County Census City Key Findings:
• Estimated Population 2010: 2,496,435• Foreign Born Persons: 51.1%• Language Other than English Spoken at Home:
71.9%
Survey of Miami Realtors Concerning International Clients
October 2011• 83% of brokers have worked with an International client in the last 12 months
STRONG DEMAND CONTINUES
MIAMI OVERALL MARKET
Source: Elliman 2002-2011 Report
