U.S. News

Foreign home buyers still keen for Big Apple slice

NEW YORK (Reuters) - Signs are that some overseas buyers are drifting back into the New York real estate market, betting a decline in prices may be about to turn.

The moon rises next to the Empire State Building (C) prior to the annual fireworks show during Independence Day ceremonies in New York, July 4, 2009. REUTERS/Gary Hershorn

The dollar’s recent rally, rather than putting off foreign buyers, is encouraging them to jump into the market before it rallies further and drives up prices, insiders say.

“People are thinking it might run away from them because there are these predictions the dollar will even go further,” said Richard Martin, specialist at DE Capital Mortgage. “We are talking a lot about foreign borrowers lately.”

The luxury end may be starting to stir in Manhattan, the 23-square-mile island that is the heart of the city’s cultural and business life and one of the most built-up areas in the world.

A Chinese businessman recently bid $33.2 million for a 5,500 square-foot apartment belonging to Italian film producer Vittorio Cecchi Gori, according to local media. U.S. billionaire Henry Silverman paid nearly $20 million for a Manhattan townhouse, setting a record for the neighborhood, other media said.

Two competing all-cash offers, one from an Italian buyer and the other from a French buyer, came in recently on a one-bedroom apartment in Manhattan’s sought-after Greenwich Village, said Drew Glick, a broker at Brown Harris Stevens.

The asking price for the small apartment was $950,000, he said.

“The foreigners that are coming to buy now, they’re wealthy, they have all cash, they’re people who have weathered the financial storm that the whole world has been through,” he said.

The euro has fallen nearly 7 percent to the dollar since the beginning of the year, and hit a 10-month low on Tuesday, after having risen for much of the previous year.


With experts mixed on whether New York property prices are heading up or down, the outlook is still risky. City property prices have fallen 15 percent to 30 percent since 2008 in the wake of the global financial crisis, in some estimates.

While there are fewer overseas buyers now than two years ago, Glick estimates 15 percent to 20 percent of recent viewers of a two-bedroom, 1,525 square-foot (142 square meter) apartment in Manhattan came from overseas. The asking price was $1.45 million.

Next month, Glick said, he hopes to host a prospective buyer from London looking to buy in the $3 million to $4 million price range.

Bid on the City, a online real estate auctioneer that specializes in Manhattan property, estimated a third of the people enrolled at a recent auction were from overseas and said foreign participants were more likely to join in.

Brokerage StreetEasy said foreign traffic on its website has more than doubled from a year ago with hits from Asia leading the way, up nearly one and a half times from last year.

“I am hearing that there are a lot of Asian buyers who have come back to the market and a lot of Asian papers have actually approached our company,” said StreetEasy’s Sofia Song.

Exact data on foreign purchases of New York real estate are difficult to get in part because there is no centralized source and because many buyers purchase through locally formed companies with U.S. addresses.

Heading into the peak of the market, ahead of the global financial crisis, foreign buyers in New York were as much as 30 percent of sales, said Jonathan Miller, an appraiser at brokerage Prudential Douglas Elliman.

Euro investors who bought before late 2008’s financial meltdown saw their investment eroded by the weaker dollar and falling house prices.

Miller, noting more foreclosures, high unemployment, and scarcity of credit, cautioned that he believes prices will fall another 10 percent to 15 percent over the next two to three years.

“I think that we have more pain in store,” he said.

Editing by Ellen Wulfhorst and Vicki Allen