Natasha and her friend thought to put up a small boutique hotel in South Bronx. They were astonished to see the rapid development already took place and in no time they started their business with ease. Bubbling with people of different origins, age and culture it is great place for a startup. Once left alone with poverty, fighting for urbanization, social status and infrastructure development, Bronx is now a hotbed for budding and as well as institutional investors. According to data from office of Borough President Ruben Diaz Jr. there is an investment increase of about 26% from the previous year. Also this year a staggering figure of 8000 new residential units are either in development phase or semi developed, up from 3697 units a year ago.
Economists from Goldman Sachs estimated that rental properties (acquired at current prices) are generating more than 6% on average nationwide. Warren Buffett commented, “distressed single-family homes are attractive investment now”.
The inside story
Today’s Individual investors have different approach and thinking. Last year in the Bronx majority of the investment purchases were of distressed properties. Proximity to Manhattans, real estate price rise of neighboring boroughs are some reasons for the rapid developments taking place here. In many pockets there are business owners holding properties for decades. They are eager to catch hold of this booming real estate market and sell those properties to the investors declaring them as distressed. There are several instances where property owners turned investors are partnering with house re-modelers. They are buying distressed property, giving a face-lift and either renting out or selling to prospective buyers who are looking for modest living standard.
“Selling your house fast is not a problem here. Investors and business houses renting out the developed property are observing a steep value hike” observed Cashmere, investor and owner, CSR Realty Investing.
There are more or less fifty identified development sites for sale in Bronx currently. One of them is a big parcel of land filled with garbage and dirt just south of the 149th Street Bridge that connects Manhattan and Bronx. “It looks ugly and a big problem for us. People coming to Bronx it’s the first thing they see”, said Wilhelm Ronda, director of planning and development for the borough president’s office.
Interestingly commercial tenants are taking interest in Bronx and wanting to relocate as the high price of Manhattan properties are pushing them to take such drastic steps. As a result investors are man hunting distressed landlords and offering good prices and offers. Study says that land costs hover around $50-$60 per foot compared with $650 in Manhattan, $160 in Queens.
In the month of March this year, NYC & Co. started its new tourism initiative at the New York Botanical Gardens in the Bronx to boost borough business activity. Such initiatives helps the real estate markets to gain momentum and investment.
Some interesting Statistics about Bronx:
- Overall development of Bronx is showing up in figures. Unemployment percent decreased by about 1.3% from the previous year. Crime rate has plummeted, with only 95 homicides compared to 653 in 1990.
- Average value of a multifamily unit is about $127,000; it was $108,000 a year back according to Ariel property.
- Average selling price is still quite low in the Bronx which makes it an attractive destination. During the 3rd quarter it was $339,000 compared to the citywide average of $888,000.