As the most populous city in the United States of America, New York City is a true melting pot. With over 800 languages spoken, it is the most linguistically diverse city in the world. It is a hub for business, culture, arts and music. Its famous landmarks including Times Square, the Statue of Liberty, Empire State Building and many others have attracted over 55 million annual visitors, making New York City one of the most visited cities in the world.

Since its conception in 2008, the AT Kearney Global Cities Index (“GCI”) has always ranked New York as number 1. On each of the five key GCI criteria, (Business Activity, Human Capital, Information Exchange, Cultural Experiences, and Political Engagement), New York consistently ranks in the top five. Home to the headquarters of 45 Fortune 500 companies, Wall Street, and top ranked universities, New York continues to be the center of business, innovation and opportunity.

Comparing Manhattan property with Hong Kong and London

New York City has the most expensive property market in the USA. However, based on research from Knight Frank, prices for luxury properties are 49% lower compared to Hong Kong and 38% lower when compared to London. For example, one million dollars in New York can purchase 433 square feet of luxury property in a prime location, which is nearly double of what could be purchased in Hong Kong for the same amount (222 square feet).

As of Q3 2014, the average price per square foot in Manhattan had risen 12% y-o-y across all sales transactions. In the resale condo segment, price per square foot increased by 7 percent to $1464 (11,355 HKD), while new development condos saw a steep annual gain of 30 percent to $1847 (14,326 HKD) per square foot.

Understanding the growth in Manhattan property market

At an average of $1,396 (10,889 HKD) per square foot, New York City is the highest priced property market in the USA. Manhattan’s geography makes it a particularly interesting market. As an island, there is limited room for development in Manhattan. While local and foreign interests in purchasing an apartment continue to rise, new properties are not in abundance. The result has been a steady and reliable appreciation for many years. While the Manhattan property prices did have a decrease of about 15% during the midst of the financial crisis in 2009, it has completely rebounded since then.

While the New York City real estate market continues to be defined by low inventory and high demand, demolition and construction permit approvals have continued to rise over the last 12 months. Demolition permits rose 25 percent, while construction approvals were up 38 percent. These increases are largely attributed to continued recovery and growing confidence in the market.

While this would indicate a future increase of new properties, most new construction seems to be luxury condo apartments ranging from at least $2000-$3000 per square foot and larger sized units. As a result, the mid-range property market (apartments being sold for less than $2MM USD) will still feel significant pressure from a lack of inventory. This would indicate that investing in a property in Manhattan with an asking price of less than $2MM USD remains a good investment for the coming years.