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Chinese No. 1 buyer of Manhattan flats for 1st time
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FOR the first time, the Chinese have become the biggest foreign buyers of apartments in Manhattan, real estate brokers estimate, taking the mantle from the Russians whose activity has dropped off since the unrest in Ukraine and the imposition of sanctions against Russia by the US.
Wealthy Chinese are pouring money into real estate in New York and some other major cities around the world, including London and Sydney, as they seek safe havens for their cash and also establish a base for their children to get an education in the West.
The Chinese ranked first in both volume and value of sales in all estimates of foreign buyers in New York City by five of the top real estate brokerages. Opinions differed on just how the Russians, Europeans and South Americans stacked up next.
There are no official figures collected on the national and ethnic backgrounds of homebuyers because of US fair housing laws, designed to protect against discrimination.
The Chinese interest is mainly a valuation play, real estate experts say. After the US housing bust in 2007-2010, home prices in major American cities fell to levels that made them attractive. While US prices have been recovering, they are still appealingly low by comparison with many other parts of the world.
Many Chinese buyers are switching their interest away from markets like Shanghai, Hong Kong and Singapore amid fears that prices have soared to frothy levels in those cities. Hong Kong has the second-most costly housing market globally, behind Monaco, with Manhattan trailing in sixth place, according to British real estate research firm Knight Frank.
The brokers say that many Chinese buyers are also investing abroad so they can own property near major educational institutions. Some are buying homes near top colleges — even though their children are so little they can’t walk yet. More than 80 percent of wealthy Chinese want to send their children overseas to school, according to the Hurun Report, a Shanghai-based publication.
“By far and away, the Chinese are the fastest growing demographic,” said Dean Jones, a US-based broker with Sotheby’s International. “They are the top consumer for real estate, and New York is front and center.”
Pamela Liebman, CEO of the Corcoran Group, one of the best known New York real estate firms, added: “In sheer numbers, the Chinese outspend the Russians in every segment of the market.”
In Manhattan, it wasn’t long ago that Russian oligarchs dominated the gilded world of real estate, gobbling up status-heavy, marquee properties, such as an US$88 million, Robert A.M. Stern-designed penthouse and a US$75 million mansion with a ballroom and a rooftop aerie.
Now, many brokers say, Russian buyers have become scarce largely because of fears that the struggle over Ukraine will worsen leading to increasingly tough US sanctions on politically-connected and wealthy Russians.
Moving up market
The Chinese grew to 28.5 percent of Field’s international business in the first quarter of 2014, up from 19 percent last year. “We’ve only scratched the surface with Chinese demand,” Field said.
Chinese buyers typically used to pick up properties in the US$1-5 million range in New York, often buying two and three at a time for investment purposes, the brokers said.
But lately they have been moving up market, brokers say. The current in-vogue building among the Chinese is Central Park’s One57, a new skyscraper designed by Pritzker Prize-winning French architect Christian de Portzamparc, where they can spend US$18.85 million for a three-bedroom or US$55 million for an apartment taking up the entire 81st floor. The building comes with all of the amenities of a five-star hotel.
They are also venturing out to Long Island, where they are buying Gatsby-esque mansions set atop rolling greens.
Broker Shawn Elliott ferries around groups of Chinese buyers in Rolls Royce and Mercedes-Benz cars every week, often catering to entire families at a time.
“They’re looking for trophy properties,” said Elliott. “They’re looking for their children to be comfortable, and to be near Columbia or New York University.”
Some Chinese aren’t even bothering to come to the US at all, going so far as to pick up multi-million-dollar properties sight unseen.
One Chinese buyer recently bought two properties, worth US$13 million, at the Baccarat Hotels & Residences in New York. The deal was done via the Chinese social networking application WeChat, said the broker who did the deal, Douglas Elliman’s Emma Hao.
New York isn’t alone.
Chinese mainlanders were the top foreign investors in Australian real estate last year, according to Australia’s Foreign Investment Review Board.
In London, robust property laws and British universities are a big draw for the Chinese. They became the city’s No. 1 foreign buyer last year, according to Knight Frank, accounting for 6 percent of all purchases over 1 million pounds (US$1.68 million). The Russians accounted for 5.2 percent.
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