Posted by Leonard Steinberg of URBAN COMPASS on December 9th, 2014

The $500,000 per month rental of a full floor apartment located on the 39th floor of the luxury Pierre hotel, boasting 4,786 square feet of living space, six bedrooms and 6½ bathrooms, including the Presidential Suite has made headlines as a major rental record for the New York market. Yet when looked at from a slightly different angle this is actually a ‘good buy’.  The suite is available to rent for $19,318/night…..which would equate to roughly $589,000.00. Does this means the room was discounted by about 15%? If an additional room was added besides the presidential suite to make up the full floor, this discount may actually be larger.

This rental is significant not only because its a ‘record’ (although comparing short term furnished rentals of hotel rooms with fully inclusive services to regular rentals is a bit questionable). It is more important in highlighting why super-rich foreign buyers buy an apartment in New York. The costs of a massive hotel room able to accommodate a large group in Manhattan is EXORBITANT, and actually makes buying an apartment seem relatively cheap in comparison. Especially when you factor in usage AND longterm appreciation of the asset. New York will continue to be a Global Center attracting the wealthiest of the planet: buying an apartment here not only makes sense from a practical perspective, but also from a financial one.

Take this down a notch: If you visit New York for 4 months of the year, a hotel room will cost roughly $ 1,500/night….and thats for a high end 1 bedroom. That is $ 180,000 per year ($15,000/month). That would cover ownership of a $4 million apartment. The pure hard mathematics of buying often drive the decision of foreign buyers to invest in property in New York.