Manhattan real estate hits new price record

Luxury real estate market sparks bidding wars
Luxury real estate market sparks bidding wars

The price of a square foot of real estate in Manhattan hit a record in the third quarter — rising to $1,497, according to a new report.

The third-quarter Manhattan real-estate report from Douglas Elliman showed the real estate market was surprisingly strong given global economic weakness and volatility in the stock market. Inventory is tightening, prices are rising and apartments are selling faster and with frequent bidding wars. Despite some claims that real estate — especially at the high end — is reaching bubble proportions, there are few signs of a slowdown, at least for now.

Penthouse at The Charles sold for $38 million, making it the most expensive apartment sold in Manhattan during the third quarter.

"Everything is selling fast, I don't see how there could be a bubble," Howard Lorber, chairman of Douglas Elliman, told CNBC. "I think to some degree real estate follows the stock market, but people buy real estate to live in also, not just to invest in."

According to the report, the average sale price of a Manhattan apartment rose 3 percent year over year to $1,737,565. The number of sales jumped 10 percent from last year and 37 percent over the second quarter.

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The average price for square foot increased 18 percent for the year and 11 percent for the quarter, driven largely by new condo developments that are pushing up prices. Almost all the new developments are getting more than $3,000 a square foot, Lorber said.

Despite a Manhattan skyline filled with cranes and construction sites, sales inventory overall in Manhattan remains low and is actually declining. Listing inventory fell 3 percent over last year and declined 1 percent in the quarter to 5,654 units for sale.

With so few units up for sale, bidding wars are becoming more commonplace. More than half of all sales were at or above the list price in the second quarter — a seven-year record. And apartments sold within an average of 73 days after being listed — the fastest ever.

"The speed of this market is what stands out to me," said Jonathan Miller, of Miller Samuel Real Estate Appraisers, which compiles the Elliman report.

Lorber added that the strong job market in New York and Wall Street is driving most sales. But he said overseas buyers remain strong. The turmoil in the Chinese stock market and economy, he said, has driven more wealthy Chinese to move money into New York real estate.

"When the Chinese stock market went down, when their real estate market went down, that didn't stop them from buying here," Lorber said. "It actually made them more interested in getting their money out of there and buying in New York City."