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Manhattan's market for posh rentals is booming

Manhattan's would-be homeowners are not comfortable buying expensive apartments now, and are renting them instead. Many are seeing greater value in a lease, even if they can afford to own the same apartment.

New York

MANHATTAN'S would-be homeowners may not be comfortable buying expensive apartments right now. Instead, they are renting them.

New leases for the borough's priciest units, costing at least US$10,000 a month, jumped 16 per cent in April from a year earlier to 149, while agreements declined for the market as a whole.

This is according to a report released on Thursday by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. The median rent in that upper tier climbed 3.9 per cent to US$13,995.

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High-end tenants also needed fewer incentives to sign. About 19 per cent of new leases at US$10,000 or more came with a sweetener such as a free month. That compares with 37 per cent of deals Manhattan-wide, the firms said.

Across all price ranges, rents climbed for a fifth straight month - a resurgence fuelled by demand from New Yorkers who have the cash for a purchase but are waiting for sellers to drop their sky-high prices.

Many luxury-seekers are seeing greater value in a lease, even if they can afford to own the same apartment, according to Grant Long, a senior economist at listings website StreetEasy. "You have flexibility," said Mr Long, whose firm released a report showing surging demand for apartments in the city's priciest zip codes. "For a lot of folks, borrowing heavily to invest in an asset that has been declining in price over the last year is something that's difficult to swallow."

A penthouse at the Ritz-Carlton hotel in lower Manhattan's Battery Park City, offered for sale last year at US$8.5 million, found a tenant after being listed for rent at US$19,995 a month, according to StreetEasy.

And in Brooklyn, a two-bedroom duplex was leased shortly after it came on the market for US$8,500 a month. The same unit, in the Dumbo neighbourhood, has also been for sale since July last year and is still seeking a buyer at US$2.395 million. BLOOMBERG