New York Real Estate After Its Slowest Year Since 1995 – Why Developers Should Look to the Gulf

Like the global economy, the New York real estate market is experiencing turbulence.

Data for 2023 show a drop in residential sales in New York City and a marked decline in interest in commercial property, above all office space. As a result, the average number of days a property spends on the market has grown.

Real estate sales across the United States fell in 2022, and the trend continued in nearly every region, including New York, throughout 2023. Sales in 2023 fell 18% compared to 2022, the slowest year for sales since 1995. Experts attribute this in part to the highest mortgage rates in three decades.

High mortgage rates are a key factor here, but not the only one. The rise of remote work during the pandemic sharply reduced demand for commercial property in New York. High rents, safety concerns, and the option of working from anywhere have prompted thousands of New Yorkers to look to other cities and even other states.

Taken together, these factors point to a difficult period ahead for New York developers. Slower sales, weaker demand for luxury residential and commercial property, and properties sitting on the market far longer mean financial losses, fewer transactions and, in the end, layoffs at companies operating in New York City.

What should developers and real estate agencies do? One option is to wait out the downturn. Another is to actively attract foreign investors and buyers looking to diversify their portfolios and find a haven for their capital.

Here we would suggest looking at the GCC countries. Relatively stable oil prices over the past three years, together with the transformation of Dubai, Doha and Manama into regional and, to a degree, global financial centers, have brought hundreds of billions of dollars into the region.

A few figures. In 2022, on the back of rising energy prices, GDP growth in the GCC countries reached 7.3%, and their combined GDP came to $2.4 trillion. The region is home to many wealthy individuals, both local and foreign: 42,400 millionaires in Dubai, 23,800 in Abu Dhabi, 21,300 in Doha, and 17,200 in Riyadh.

Given geopolitical risks and corporate and private investors’ desire to diversify their portfolios, New York developers are well positioned to offer suitable investment solutions to potential buyers and investors.