Where to start?
I mean at the top of the list is the idea that Mnahattan investments are infallible. I'm inclined to believe that this is bullshit. I mean hell, look at the financial district. I have a few friends and clients who put money into that neighborhood in 2007. Their flats are in the red. Why? Because FIDI, while in Manhattan, is a relatively boring place. It's connected to every major line of transportation, yes, but it is lacking in a nightlife. Oh, and since one hasnt developed/taken off, there's not much of a desire to live there. Paradoxically, look at dodgy neighborhoods up in the Bronx (think south Bronx) where a flat is CHEAP, because it's still fairly unsafe (sorry to those residents I may have offended). The bronx is seeing the beginning of the gentrification trickle, and the space there is prime to be invested in.
This is especially true in the south bronx (and also areas off Atlantic, past Franklin in BK) where the buildings are pre war, meaning they're developed with larger ceilings, and more grandiose, albeit in need of a power washing, facades. Those areas are just in need of a police presence and a good cleaning. The buildings need a good once over, and the investment is riskier, but the reward is, in my opinion, going to be a better bet in the long run, as opposed to a flat in the Village (either one). For one, you'll be getting a lot more space, in a more sturdy building, for less price and with a higher likelihood of noticeable value increase. OH and add to that that you can buy into HDFC's which are insanely cheap, albeit with a bitch of a flip tax if sold too early, and which can be used to generate a huge return over the long run. Shit I once did a sale in a Manhattan HDFC (or some iteration, I cant recall the program name) where the purchaser had purchased 15 years prior to the sale for a few grand, but sold for 650K. 20% flip tax on that sale was steep, but they netted a 400K+ gain in fifteen years. Those opportunities do NOT exist in Manhattan anymore, but they do elsewhere in the right spots of the outer boroughs.
Perfect example of Manhattan's value stagnation is Grammercy Park. I've done a few transactions there, and each, without fail was for at least over a million. Each building was old and decrepit, and the unit owners were either millionaires or very old folks. The buildings had shit in reserves, and no flip taxes to build them up. But people still bought them. They were wasting their money on an already expensive property that would only marginally go up. That same money could have bought a BUILDING in a decent place in Bk, with change left over for renovations. They could quadruple their investment, but they didnt.