Wealthy Chinese Investing More In NYC Real Estate

Sleek glass buildings most popular choice amongst Chinese investors Mainland China is an ever-expanding economy of 1.3 billion people; and now, as explained in a NY Times article, a rapidly increasing amount of its wealthiest citizens are choosing to invest in Manhattan luxury real estate. What began roughly two years ago as a minimal increase in inquiries regarding these properties has ballooned into a large number of high-net worth Chinese businessmen searching for luxury condominiums in the $500,000 to $10 Million and more range. This is exciting news within the NYC real estate market, with these Chinese investors helping to strengthen property values, which could in turn lead to an increase in investments by both foreign and domestic parties. As sales to these foreign investors continue to rise, could we perhaps be witnessing a transformation of the Manhattan real estate market before our very eyes?

There are a host of reasons wealthy Chinese have decided to begin investing in NYC luxury apartments. The loosening of foreign exchange restrictions has aided in this new trend. “There is more ability to move funds offshore effectively and perfectly legally,” explains Neil Palmer, a real estate executive. Combine that with the fact that Manhattan luxury condominiums are more cost efficient as compared to other cities in which wealthy Asians are interested, and this shift can be perceived not only as logical but financially savvy. In NYC, luxury properties are on average $1,500 per square foot, as opposed to similar properties in London, averaging $3,600, Hong Kong at $2,000 and Monaco which commands $4,300 per square foot. Chinese buyers are looking for apartments not simply as homes for themselves, but as places to house their children attending college, as well as investments. Interestingly enough, they almost unilaterally prefer condominiums over co-ops, having trouble understanding the co-op system which does not exist in China. Along with that, they also rarely take out mortgages, with estimates at a whopping 75% of Chinese investors choosing to purchase properties in cash. This falls in line with a cultural belief which suggests that coming to the table without the full amount is a negative reflection on the investor. Continuing with this, other Chinese cultural norms also come into play as they choose luxury properties in which to invest. For example, Chinese buyers tend to prefer sleek glass boxes, much like the newly constructed 57 Reade Street Property in Tribeca. Delving further into these preferences is the concept of Feng Shui, which plays into, for example, the floors they pursue. Often times, Asian buyers will not look at anything on the fourth floor, which in some dialects rhymes with the word death, and conversely, seek luxury apartments on the eighth floor, which they associate with luck and prosperity. All of these issues play their parts in the decision making of Chinese investors, providing not only a new market but a different style of thinking within the NYC real estate industry.

This new trend of increased Chinese investments in Manhattan real estate suggests more than just a shift in the NYC luxury condominium market. It is indicative of the growing Chinese population within Manhattan and its surrounding boroughs, and the increased interest of New Yorkers in Asian languages and culture. Perhaps most importantly, however, is the fact that these investors see Manhattan real estate not just as a wise investment, but also one of a secure nature. In turn, this could lead to further investing, by both foreign and domestic groups. As the Chinese economy continues to develop, it is only logical that the wealthy within China will invest even more in our fair city, and perhaps revolutionize the nature of the Manhattan real estate market.

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