Condos like those at the new Aloft Hotel on Frederick Douglass Blvd. are driving an upper Manhattan real estate rebound.

After a severe downturn, the housing market in upper Manhattan is stabilizing.

While condo prices in northern Manhattan dropped 6.6% to $537 a square foot in 2010, they jumped in the second half of the year, propelled by buyers at swanky new developments, according to a new report by real estate firm Ariel Property Advisors.

“If you have a high-end quality product, especially in prime locations below 125th St., it might command higher prices in the near future,” said Shimon Shkury, president of Ariel.

Prices per square foot for several new buildings on Frederick Douglass Blvd. reached between $675 and $700. While high for the neighborhood, that still represents at least a 40% discount compared to condos below 96th St., Shkury said.

The rental market in upper Manhattan held steady, with nonregulated rental rates at $26 per square foot, which is about $1,083 a month for a 500-square-foot apartment. That’s flat with 2009 levels.

As the residential picture improved, transaction volume in upper Manhattan increased 69%. Total dollar volume reached $622 million, up 113%.

But the rebound in upper Manhattan last year followed a dismal 2009, when sales hit their lowest levels in 30 years. Momentum is expected to continue this year and next year as the economy bounces back.

Real estate is hardly the only thing rebounding in northern Manhattan – the Daily News is expanding its local coverage. Beginning Feb. 10, residents will find the Uptown News section on Thursdays, Fridays and Sundays.

“Local coverage has become increasingly important to New York residents, and we are taking this initiative to build upon our already strong presence in these areas,” said Bill Holiber, CEO of The News.

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