Why luxury property landlords in the US are bracing for a tough 2017
Why luxury property landlords in the US are bracing for a tough 2017
A remarkable 378,000 new apartments will be completed this year
A glut in the supply of luxury apartments is gripping the US, forcing landlords to bandy their offerings at a markdown, The Wall Street Journal reported.
About 378,000 new apartments are poised for completion stateside in 2017 — a 35 percent increase over the 20-year average, according to real estate tracker Axiometrics Inc. The New York metropolitan area alone will double the historical average for the region with almost 30,000 new apartments to be completed this year. Around 85 percent of under-construction units will be in the luxury segment.
US cities may suffer from negligible rental growth this year as a result of the oversupply. “This will be a very challenged leasing environment almost everywhere,” said Jay Parsons, vice-president of MPF Research, a property consultancy that analyses the US apartment market.
More: Russia’s spy homes in the US – 4 things we know so far
Last year saw a 3.8 percent rise in US apartment rents, a modest increase compared with the record 5.6 percent year-to-year growth in Q3 2015, according to an MPF report released this week.
The number of apartments entering the American market seems to be diluting any momentous gain in demand. Although a record 50,000 new units were rented in Q4 2016, around 88,000 new units were completed in the same quarter, a peak unseen since the 1980s.
Such surfeit has led developers to offer deep bargains and other incentives, with reports of landlords waiving security bonds and making the first three months free.
“This is going to be one of the best apartment markets that I’ve seen [for renters]since 2011,” Ric Campo, chief executive of Camden Property Trust, said. “The consumer is going to have much broader choice at a lower price.”
Read next: Chinese property investors are unlikely Trump fans
Source: Property Report