PROPERTY is not the only thing going for a premium in Manhattan. The real estate market has become so inflated that developers are now paying handsomely for thin air.

In the latest property deal, the airspace above the ritzy Upper East Side of New York is selling for $430 (£249) per sq ft. The price, part of a planned luxury 35-storey tower with views of Central Park, is more than double the previous going rate of $200 for New York’s breathing room.

New Yorkers have long adhered to the maxim: “Buy land — they’re not making it anymore.” Now, forced to build upwards because of the limited space, developers can acquire “air rights” from neighbouring buildings to allow them to go higher than planning regulations would otherwise allow.

The developers William and Arthur Zeckendorf are poised to pay $430 per sq ft for the unexploited air rights over Christ Church and the Grolier Club at Park Avenue and East 60th Street. The rights will be transferred to a site on a prime block of East 60th Street where the Zeckendorfs and their partners own three buildings that will be demolished to make way for the new tower.

The Grolier, a private club for book-lovers, has already agreed to the sale and will net about $7 million.

Christ Church, a 75-year-old Methodist congregation, will vote on Sunday whether to sell its 70,000 sq ft of air rights for more than $30 million. Officials would use the money to maintain the church and finance its soup kitchen. The deal with Christ Church would also enable the tower to obtain a coveted Park Avenue address, even though the new tower will be on 60th Street.

Despite warnings about a bursting housing bubble, the Zeckendorfs, third-generation New York developers, believe the top end of the market will continue to prosper. They expect to make back the high price they are paying for air rights by selling the additional upper-floor apartments with sunlight and park views.

The brothers are also developing a luxury complex on the site of the old Mayflower Hotel on the Upper West Side, where Daniel Loeb, an outspoken hedge fund manager, is about to pay a record $45 million for a penthouse.

“We want to concentrate on the very high-end market, where we see tremendous strength and a limited inventory,” Arthur Zeckendorf told The New York Times.

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