Are you talking a modern condo? If so I believe it. If not, you can find places for cheaper than that. Put it this way last month I rented a 1BR in a Chelsea br

Are you talking a modern condo? If so I believe it. If not, you can find places for cheaper than that. Put it this way last month I rented a 1BR in a Chelsea brownstone for $2,000/month (which is generally more expensive than Midtown). But think about those numbers for a second. $2500/month is $30,000pa or a 3% gross return, even less once you factor in maintenance. To put that in perspective, 5% gross return seems to be the benchmark in Australia (although in Australia there tends to be a tradeoff between capital growth and annual income). In London I've seen the gross return be 10% or even higher. So who would invest $1 million for a <2% gross return? That's nothing but a bet on future capital gains. In other words it's speculative. So the question is: is that sustainable (meaning will rents go up to match) or unsustainable (meaning prices will stagnate or go down)? On a side note, some may consider it strange that I'm talking about the rent figure as a return. I've certainly spoken to many people who can't look past the speculation but that income is really important as it does relate to the asset price. They simply can't get too far out of whack sustainably. Commercial or industrial property tends to be judged much more on viewing the property as an asset that generates income (Las Vegas casinos notwithstanding).