Second Ave. Sagas

Beijing project highlights real estate value of Second Ave. subway

Written by

Benjamin Kabak

in

The green 5 will soon open in Beijing, sending real estate values along its path skyward.

As the 2008 Olympics approach, the Chinese government is hard at work preparing Beijing for its international unveiling. Part of this cosmetic overhaul of a city on the brink of globalization a brand new subway line.

I’m fascinated by this new subway lines and the parallels we can draw between it and soon-to-be addition to New York City’s subway system. First, this new line covers about 7 more miles than the Second Ave. subway will cover. It will take China all of five years to complete it. While they are building a line through land that isn’t nearly as developed as Manhattan’s East Side, I think this says more about China’s labor practices than bureaucratic efficiency.

But the more interesting aspect to this project is the effect the new line is having on Beijing real estate. According to the article linked above in the English-language China Daily, real estate values are skyrocketing along the path of the subway:

Since Beijing subway’s Number 5 line project started in 2003, the prices of the houses along the route rose by 17.8 percent per year on average.

When Jia Yun Yuan, a property project in Changping District, at the north end of the No 5 subway line, opened in July 2003, its average housing price was only 3,700 yuan (US$485) per square meter. But now even the prices of second-hand houses have hit 7,300 yuan (US$957) per square meter. Also, at Song Jia Zhuang, at the south end of the yet-to-be-opened subway line, the prices of three buildings on sale are between 12,000 yuan (US$1,573) and 13,800 yuan (US$1,809) per square meter.

I got to thinking: Will this happen in New York? Over the last few months, I’ve talked to some of my friends in real estate. As speculation mounted that the Second Ave. subway would actually become a reality this time around, they all agreed that now would be the best time to invest in East Side apartments.

As it stands right now, people who live on York or East End Avenues have to trek a long way to reach the Lexington Ave. IRT stops. Even residents of 1st Ave. are hardly around the corner from the 4, 5 or 6 trains. With a new line snaking up 2nd Ave., all of those people living on the far East Side will suddenly find themselves blocks away from the subway instead of miles. These apartments will soon become even more desirable places to live.

So invest now, I say. If you’re thinking of buying an apartment on the Upper East Side where the first part of the Second Ave. subway is set to open in 2013, now is the time to seal the deal. Already, the typical market forces are pushing up the value of East Side apartments; as China, potentially our next big global competitor, has shown us, these numbers will only rise higher and higer as the Second Ave. subway nears completion.

Comments

8 responses to “Beijing project highlights real estate value of Second Ave. subway”

  1. guestofaguest

    very interesting observation…could be very good investment opportunity.

    Reply
  2. Mark the Shark

    With stations at East 72nd, 86th and 96th Streets opening 2013 at least, you’re best investment would be around those stations.

    In other words, properties between East 77th and East 82nd and East 89th to East 92nd Streets on the Far East Side of Manhattan will have very little benefit from the 2nd Avenue subway.

    Reply
  3. Benjamin Kabak

    In other words, properties between East 77th and East 82nd and East 89th to East 92nd Streets on the Far East Side of Manhattan will have very little benefit from the 2nd Avenue subway.

    I disagree. These stations all have multiple entrances planned. You’ll be able to access the stations at 69th St., 2nd Ave. between 83rd and 84th Sts. and 94th St, respectively. Plus, these stations are significantly closer to those Far East Side areas than the current Lexington Ave. lines.

    Sure, Second Ave. real estate will enjoy the greatest benefits and make for the best investments. But I have a hard time believing this line won’t impact the entire East Side market.

    Reply
  4. Dan

    You should do an analysis of how housing values near the subway line improved relative to other neighborhoods that either already had one or that didn’t have one. All housing prices everywhere went up substantially from ’03 to now

    Reply
  5. Mark the Shark

    The stations are still spaced considerably far apart for Manhattan subway stations.

    Stations typically are spaced from 6-10 streets apart (below 125th Street), but here you have 10 and 14 blocks between stations. Stations are very pricey to build and considerably controversion given that they claim some real estate. Also, these stations will be like the last few that the MTA have built, in which they will be buried WAY below ground – this is no cut and cover operation like the 1900s.

    A successful Bus Rapid Transit route on 1st and 2nd Avenues may have as much to do with the appreciation of value for many properties on the East Side as the 2nd Avenue subway.

    Reply
  6. TheCro

    Once again, this highlights one of the concerns that I have over the 14 block “gap” between the proposed 86th Street and 72nd Street Stations of the 2nd Avenue Line.

    This 14 block area is already so densely populated, there is no great incentive or advantage to touting the “longer stations” with their “increased number of entry points” that the 2nd Avenue Subway will accommodate – OR – the effect / influence that this might have on Real Estate Valuations in this particular part of the Upper East Side neighborhood.

    Forget the rhetoric, deal with the reality: I LIVE on 77th and 3rd Avenue. I USE the 77th Street Stop on the Lexington Avenue Line. Which proposed 2nd Avenue Subway stop do you think a person who lives on 77th Street and, say, 1st Avenue or York Avenue, should use?

    That’s why, in my earlier, detailed post I floated the idea / asked the question why there wasn’t a ~79th Street Station planned for the 2nd Avenue Subway?!

    So, to address this thread specifically, all I would say to anybody who is reading this post and is contemplating about speculating with Upper East Side real estate between 86th and 72nd Streets – don’t be fooled and overpay if you speculate – especially between 82nd and 76th Streets – since you will still have to walk your sorry ass a good distance to get to the 2nd Avenue Subway OR the Lexington Avenue Subway.

    I don’t want to come across as being rude or crude, but, again, the logic, numbers and reasoning behind this 14 block “gap” is so frustratingly obvious to me, as an Upper East Side Resident who actually lives in this affected area.

    I truly beleive not putting a stop at ~79 Street on the New Second Avenue Subway is an amazingly foolish “squandering” of a truly historic opportunity.

    Reply
  7. Mary Beth Hurtado & Elliott Lewis

    I am not familar with the subway system or schedule but TheCro comments sure makes sense

    Reply
  8. Second Ave. Sagas | Blogging the NYC Subways » Blog Archive » Doubting the future of the Second Ave. subway

    […] uncertainty. We’ve got seven long years — how exactly did Beijing build an entire line in four years? — for this project to once again fall […]

    Reply

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