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 a Western education.
Reporters asked five of the top real-estate brokerages for their ranking of foreign buyers in New York. The Chinese ranked first in both volume and value of sales in all their estimates.
Photo: Reuters
The Chinese interest is mainly a valuation play, real-estate experts say. After the US housing bust from 2007 to 2010, home prices in major US cities fell to levels that made them attractive. While US prices have been recovering, they are still appealingly low in 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. Luxury apartments cost between US$44,100 and US$53,800 per square meter in Hong Kong, while in Manhattan and Sydney, they cost half that, from US$22,600 to US$26,900 per square meter, according to Knight Frank’s Prime International Residential Index. London is also cheaper, at US$35,500 to US$44,100 per square meter.
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 cannot yet walk. 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... They are the top consumer for real estate and New York is front and center,” US-based Sotheby’s International broker Dean Jones said.
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 was not long ago that Russian oligarchs dominated the gilded world of real estate, gobbling up status-heavy, marquee properties, such as a 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.
“They’re gone, they’re gone... They’ve been gone since the Crimean outbreak,” Sotheby International broker Nikki Field said.
The Chinese grew to 28.5 percent of Field’s international business in the first quarter, up from 19 percent last year.
“We’ve only scratched the surface with Chinese demand,” Field said. “I think the Chinese trend is onwards and upwards... There will be more Chinese buyers, and they will take more share of the market.”
“New York isn’t alone,” Knight Frank partner Liam Bailey said.
In Sydney, the Chinese became the top buyers of new luxury homes last year, according to sales research conducted by Knight Frank.
Chinese were the top foreign investors in Australian real estate last year, according to Australia’s Foreign Investment Review Board, buying US$5.9 billion in property, or 11.4 percent of the total foreign real-estate investment.
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