Among the biggest real estate stories of 2020 was the outmigration of wealthy buyers from cities to suburbs, motivated to seek out larger homes and more space as the coronavirus raged in major metropolises.
In the New York area for instance, sales boomed in the suburban counties outside the city, with 65% more homes sold in Fairfield County, Connecticut, in the summer months of 2020 than in June and July of 2019. There was a similar exodus from London, with 73,950 homes purchased outside the capital in 2020.
But with the vaccine rollout underway—and as some buyers reconsider whether they want to settle down in the suburbs permanently—there are promising signs of a reawakening of prime markets in major cities, providing an opportunity for sellers to get a better deal than just a few months ago.
And while buyers are still wary of investing in units in large apartment buildings, demand for luxury single-family homes in London has strengthened, with some record-breaking deals made after the lockdown ended in May. In New York, there was a resurgence of interest in properties in Brooklyn, with the outer-borough perceived as a safer place to live than Manhattan.
There are commonalities in the features and amenities of city homes that are still attractive to buyers, one year into the Covid-19 pandemic, real estate analysts say.“Townhouses in central areas are in demand, especially those with gardens, private space, and all those things that have become more important during the pandemic,” said Liam Bailey, Global Head of Knight Frank’s Research Department in London. “Apartments have been weaker in terms of take up.”
In New York, in addition to townhouses, apartments in boutique buildings are increasingly desirable to buyers who, in light of the pandemic, are less interested in larger properties with extensive shared amenities.
“Buyers are looking for smaller, boutique buildings, and at the high end, they want elevators that open directly into their individual units,” said Julie Gans, a broker with Compass in New York. “Renovated apartments with outdoor space are well-positioned for this market.”
Such features have become especially attractive to buyers, who are no longer deterred by the pandemic but face tight inventory and heated competition, so sellers of these types of city homes will get the best deals if they list now.
“We are seeing people who have committed to coming back to the city, and in the first month of the year inventory has lessened and more deals are happening,” said Allison Chiaramonte, an agent with Warburg Realty in New York. “Multiple offers are being made on certain properties.”
Desirable Features of City Homes in 2021
The demand for large, amenity-packed buildings significantly diminished over the course of 2020, as the pandemic made shared fitness, work, and entertainment centres in high-end buildings undesirable and inaccessible.
Now, buyers committed to staying in cities are looking for boutique buildings with larger apartments, where they can work and enjoy leisure time in their own individual spaces, or townhouses where they can have control over the entire property.
“Over the last 10 years, lots of bigger developments have focused on gyms and shared office spaces, all of which have become much less attractive during the pandemic,” Mr Bailey said. “The real focus is now around privacy and staying separate from other households—anything that offers that opportunity, as well as outdoor space, is at a premium at the moment.”
In Los Angeles, some developers are shifting gears and moving amenities to the outdoors, so that residents can still enjoy building perks in a safer way.
“Prior to the pandemic, multifamily developers were trying to provide live, work, and play spaces in the same location,” said Keith McCloskey, principal at KTGY Architecture + Planning in Los Angeles. “During the pandemic, they’re offering outdoor spaces at a variety of scales, so there are opportunities to work in a covered garden space, use rooftop lounges, and get out of small living units.”
Such features are also in demand in Sydney, even as the Australian city is deemed a Covid-19 success story for its comparatively low case numbers. Expats and foreign buyers alike have been flooding the city’s prime real estate market, with properties close to the water, particularly in demand.
“The way Australia has been able to manage the virus so far has people from all over the world looking at this market as a safe haven, and I expect that we’ll be experiencing a property boom in the next five to seven years, driven largely by that desire for safety,” said Steve Grant, Chairman of Capital Corporation, developer of BOND at Bondi Junction, boutique residences close to a number of beaches. “The waterfront will remain a major drawcard for the top end of the market in locations like Watsons Bay in Sydney’s East, where there are still great buys around.
In addition to more square footage that allows for discrete spaces to work and attend school from home, proximity to the office and school is more important than ever, in light of the pandemic.
“Walkability can’t be duplicated in the suburbs, and more and more we’re seeing people who want to move within a 30-block radius of school and the office,” Ms Chiaramonte said. “Before, they didn’t mind hopping on the subway, but now they want to be closer.”
In New York, buildings with their own parking garages or nearness to garages is also a bigger priority now, as more New Yorkers purchase cars to avoid the close quarters of public transportation.
But with the vaccine rollout underway, some real estate experts foresee a return to the expectations buyers had before the pandemic.
“Because now the vaccine is on the horizon, people see the future and they’re optimistic about it,” Ms Gans said. “In certain buildings, they’ve reopened gyms at 25% capacity, and some people are ready to go back. I think November was the bottom and now the market has exploded again.”
Why Sellers Shouldn’t Wait to List Their Homes
Sellers of city homes with these in-demand features should consider listing their properties now. In the U.K., where a stamp duty holiday is set to end by March 31, buyers may be especially motivated to act quickly.
“It’s a positive time to be a vendor,” Mr Bailey said. “Stock is eroding quickly, and if you’re in a good location with a well-presented property you could try to do a sale before the end of March.”
(One potential caveat is the new shutdown. The U.K. housing market remains open for now, but further regional and national shutdowns are possible depending on the spread of a new, particularly contagious strain of the coronavirus.) Also looming is a new foreign buyer tax, which enacts a 2% tax on non-residents purchasing a property in the U.K.
Meanwhile, in New York, the fourth quarter of 2020 saw an uptick in luxury sales in Manhattan, along with fierce competition for high-end homes in Brooklyn.
And in early January, apartments over US$4 million represented the largest number of contracts signed, Ms Gans said.
“After spending 10 months inside, people see the deficiencies in their apartments and want a change,” she said.
Many of these buyers want homes with room separation in a shift away from the open floor plan trends of previous years, along with plentiful storage, and of course, outdoor space.
“If you have a junior four, or a two-bedroom with an office or maid’s room, the value there is a little higher because it allows people to stay in separate spaces,” Ms Chiaramonte said. “Those homes are the ones attracting people the most this year, and those sellers are better positioned.”