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The Daily News reports, “European investors — who helped keep the Downtown real estate market afloat after the collapse of Lehman Brothers — are starting to bail out, thanks to high prices and favorable exchange rates against the U.S. dollar.
For one, the U.S. dollar is at its strongest level in over a decade against the declining euro. When most of these investors bought, the exchange rate was about $1.60 per euro. But the gap between the once-mighty euro and dollar has narrowed.
“Even if these guys sold for exactly what they paid, they could still be getting 30% returns on their money because of the exchange rate,” said Daniel Hedaya, president of Financial District brokerage Platinum Properties, which also has an office in Paris. “It’s pretty incredible.”
Lower Manhattan apartment prices are at historic highs, to boot. For the first time in the history of the Financial District, the average price for an apartment topped $1 million in the fourth quarter of 2014, according to a new report by Platinum.
Brokers are also urging investors to sell sooner rather than later, since a wave of new condo inventory is slated to hit the market over the next 18 months, putting downward pressure on prices.
“New York City is held up by a couple of different currencies,” said Karla Saladino, a managing partner at brokerage Mirador Properties. “A slowdown in investment coming in from Europe could mean a cooling down in new development prices.”
That’s especially true in the Financial District, where foreign buyers make up a much higher percentage of the buying population.
As such, Saladino said she’s advising developers to play it safe by building units that could easily be converted to rentals if the market heads south again.