Whether you’re looking to purchase an apartment as a primary residence or an investment, buying property in NYC is likely one of the largest purchases you’ll ever make. It’s essential that you treat an NYC property investment the same as you would any other investment, and look for signs that it will grow in value. Many buyers hope for capital appreciation, and while you can just jump in and ride the wave of the ever-growing NYC real estate market, you can also hunt for a particularly good property investment. Here’s a quick guide to identifying real estate opportunities likely to grow at a far faster rate than the market average.
See also: What an Investment Condo in Manhattan Really Earns
1. Neighboring Development
When would-be buyers see construction near a property they are considering, most react with concerns about noise and traffic. This is understandable. But new construction is a great sign that property values will continue to increase. Developers need to justify the cost of the land by pricing a new development to reflect the premium they paid, so new development will have a higher price-per-square-foot than the existing properties around it. Once the project is complete, properties in the surrounding area will also see healthy price increases. (Learn more about the impact of construction on property prices here.)
2. Up-and-Coming Neighborhoods
If you move to the Upper East Side, you know what to expect. If you move to Crown Heights, you’re going to be in for a few more surprises. As pricing in many parts of the city grows out of touch with what buyers can pony up, once-overlooked neighborhoods are undergoing transitions in record time. When these neighborhoods attract new residents, new retail and commercial opportunities spring up. Blocks change quickly, and when that happens, property values climb, too.
3. Infrastructure Spending
Infrastructure is what makes the city run: subways, highways, bike paths, sidewalks, and even ferries. Without mobility and the infrastructure that supports it, our city would not be as amazing as it is. Also of fundamental importance is public space like parks and libraries. When neighborhoods benefit from a significant improvement in infrastructure or public space, there’s a massive opportunity to realize long-term gains. Consider the development now taking place in places like Hudson Yards and the Lower East Side’s Essex Crossing.
4. Coffee Shops
New York City has a massive coffee culture. Once upon a time, a Starbucks (or two) on every other corner was par for the course. How the times have changed. Artisan coffee shops have come a long way, and proprietors from across the world are looking to leave their mark. My personal favorites are Laughing Man in Tribeca and the recently opened Boundless Plains Espresso in the Financial District.
So what does a coffee shop have to do with the real estate market? They’re a good indicator of what’s happening in a neighborhood. Trendy coffee shops make for trendy neighborhoods. It doesn’t happen overnight, and generally a hip cafe will set up shop long before the housing stock appreciates. But design-inspired coffee shops, restaurants, bars and other social venues are key to attracting both visitors and locals. These spots will drive the popularity of a neighborhood — and its property prices.
5. Artists
Have you ever noticed that neighborhoods that were once a hub for artists end up turning into the city’s priciest areas? That’s no surprise — it’s pretty much a science at this point. Consider neighborhoods like Chelsea, SoHo, the Village and Tribeca: All were once home to thriving communities of artists before seeing their property values skyrocket. So if you’re looking for neighborhoods that will continue seeing upside potential, look for artists. While the opportunities for artists to remain in the city seem to decrease every year, there are still pockets of them and galleries that support their work. Property prices in those areas will continue to increase — until, ironically, the artists themselves can no longer afford to remain there.
A Reminder
Appreciation is never guaranteed. No one can predict the real estate market, but I always tell my clients about factors that will positively impact property values. The key is to keep an open mind and analyze each opportunity as it comes along. And while you’re out there viewing apartments, make sure to enjoy a good cappuccino, too!
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