A weak dollar is fueling an already hot New York City real estate market, as foreign buyers seeking bargains are adding to the seemingly insatiable demand for apartments and office buildings in Manhattan.

Four reports by brokerage firms due to be released today say the average Manhattan apartment sale price in the second quarter, April through June, climbed to more than $1.3 million, a record-high, according to three of the firms. All four reports will show the volume of sales at a level not seen for decades, if ever, as co-ops and condos have been changing hands at a frenzied pace despite the high prices.

On the commercial side, foreign investment is helping to leverage deals for office buildings throughout the city, as transactions frequently set new record price levels. As first reported in the Wall Street Journal yesterday, a private equity firm based in New York and financed by European family trusts, Somerset Partners, has agreed to purchase a 334,000-square-foot office tower at 450 Park Ave. for $509 million, at what is likely a record-high $1,525 a square foot.

Residential real estate brokers are quick to point to the weak value of the dollar as inspiring European and other foreign buyers to turn in greater numbers to New York City, where prices can be considerably lower than in competitor cities such as London. Yesterday, the dollar hit a 26-year low against the British pound.

“We’ve certainly seen a tremendous influx of foreign buyers over the past couple years, particularly in the last one or two years,” the CEO of the Corcoran Group, Pamela Liebman, said. “They’re providing a lot of strength — it’s very deep and it’s very broad-based.”

Hailing from Russia, South Korea, England, Ireland and other countries, brokers say foreign buyers purchase the properties for use as homes, investments, and as vacation destinations, often using the apartments just a small portion of the year. Even the buyers who previously wanted small pied-à-terres are now snapping up larger apartments with their more valuable foreign currency, brokers say.

The relative stability of the New York City marketplace makes an apartment in the city especially alluring to foreign buyers, the president of Prudential Douglas Elliman, Dorothy Herman, said.

As a fraction of all buyers, Ms. Herman said she has seen a noticeable spike within the past 12 months.

“Last year it would be have been like 5 or 7%, and I think it’s close to 9 or 10% now,” she said of the market’s proportion of foreign buyers.
The commercial market has been steadily climbing upward in the past two to three years, buoyed by steady job growth and a strong economy. With a series of high-profile property buys in recent months, including the purchase of the W hotel in Union Square, the Dubai-based investment firm Istithmar is one of the biggest buyers of commercial property in the city.

The principal of Somerset Partners, which just agreed to purchase 450 Park Ave., Keith Rubenstein, said he is certain the market will treat the massive investment kindly in coming years.

“What today’s price is irrelevant to us because we look at tomorrows price,” Mr. Rubenstein said. “We’re very confident that we will be profitable in this.”

While the residential market was far more fast-moving in recent years — prices jumped upwards of 20% in the course of a single quarter in 2004 — the past six to nine months have seen a more stable market, steadily climbing upward.

The four firms releasing reports today, Brown Harris Stevens, the Corcoran Group, Halstead Property, and Prudential Douglas Elliman, reported the average price a square foot of Manhattan apartments increased between 5% and 13% compared with the second quarter of 2006, and between 6% and 10% beyond the first three months of 2007.

The number of Manhattan sales in the past three months was significantly higher than at any other point since at least the 1980s, according to the president of the appraisal firm Miller Samuel and the author of Prudential Douglas Elliman’s report, Jonathan Miller.
In addition to the increasing presence of foreign buyers, record Wall Street bonuses in 2006 are still translating into new home purchases, as is a low unemployment rate and overall fiscal stability in the city, Mr. Miller said.

The purchases have come at all levels of the market in areas throughout Manhattan, he said, though the luxury market saw notable growth.

The high number of sales — more than 3,000 in the past quarter — has trimmed back what was once a bloated inventory of apartments on the market, bringing the number down to low levels that defy national trends.

“The story nationally is that inventory is climbing, prices are falling, and sales activity is slowing, and really on all three points, it’s the opposite picture in Manhattan,” Mr. Miller said.