Posted by Jonathan J. Miller -Wednesday, May 16, 2012, 3:34 PM
In the past few days there have been some pretty serious announcements of high end sales in the Manhattan apartment market. First there was the $52M co-op sale at 740 Park Avenue and then there was the $70M condo sale at 50 Central Park South. The former was a record – the highest sales price of a co-op apartment in Manhattan history and the second was a near record sale for a Manhattan condo. One could say this $70M sale was the highest arm’s length condo sale in history since it appears from what I’ve read that the $88M sale at 15 CPW a few months ago was more of a global divorce strategy play.
In appraising we use the “paired sale” technique to extract what certain amenities are worth. One could argue that these 2 recent sales were very similar:
- Both were about 10,000 square feet.
- Both are duplexes (2 levels).
- Both had terraces.
- Both located on well known streets/addresses.
- Both were located in pre-war buildings.
- Both sold at about the same time.
- Both appeal to an affluent buyer who doesn’t require financing.
Simplistically speaking the key differences are the form of ownership (co-op v. condo) and the view. The 50 CPS property has full frontage on Central Park, the most sought-after view in Manhattan. The 740 Park Avenue is located on the 12th and 13th floor has city views that do not clear the roof lines of most buildings in the immediate area.
In our market, the premium for a Central Park view can be about 25% of an apartment’s value. In our co-authored research paper on Manhattan co-op v. condo value with NYU Furman Center, the inherent difference in value between a co-op and condo after controlling for all differences is about 9%.
25% + 9% = 34%
This 34% total is pretty consistent with the 34.6% difference between the $52M co-op and the $70M condo sales prices.
So the numbers aren’t so crazy after all.
- Wynn lands Ritz-Carlton penthouse for $70M [The Real Deal]
- Park Avenue co-op sells for record $52.5 million [CNN/Money]
- Fertilizer King Rybolovlev Sued By Wife For $88 Million 15 CPW Purchase [NYO]
- The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City [Miller Samuel]