Luxury condos : an analysis of sales price and hotel amenities in Manhattan

Abstract

The purpose of this research project is to examine the market pricing behavior of condos with hotel amenities in the Manhattan condo market. To do this, data was compiled from multiple sources to track variations in price paid per square foot controlling for whether the unit was part of a building with hotel amenities, among other things. Prices were tracked from 2004 through 2011 to capture the peak and fall of the most recent real estate cycle, during which luxury branded condos with hotel amenities saw a surge in popularity. The resulting analysis reveals a number of buyer preferences for building attributes as well as unit attributes. To determine the value of each attribute, the regression controls for variables such as neighborhood, floor on which each unit is located, maintenance fees per square foot and bedrooms and baths. The results of this analysis reveal that buyers are willing to pay a premium for units in buildings which have been branded. It also reveals that, controlling for all other variables, buyers do not value hotel amenities as part of the branded package. The timeliness of this research given the current surplus of unsold luxury condos should help developers responsible for the disposition of these assets by providing quantitative data to support the market and financial analysis tools already at their disposal. While this data focuses on the Manhattan condo market, the analysis and process can easily be translated to other major markets making this paper applicable to a wide range of readers.