As Investors, Chinese Turn to New York

> “This year, it’s the biggest buzz word in real estate: ‘Chinese.’ ”

And a couple years it was "irish carpenters". How did that pan out?

> I tested marketed one of my apts late last year/early this year and more than 50% of the buyers were Chinese.

translation - tried to sell at his claimed "comps" and couldn't. surprise, surprise.

Buy now or be priced out for ever !!!!!

Real estate prices never go down!!

I don't know about you guys, but I learned two things from steveF's post:

1) All of steveF's studios are in Chinatown.

2) Here is a page detailing all of Xiaolan Shang's listings. And remember, 90% of her client base is Chinese: http://www.elliman.com/real-estate-agent/listings/xiaolan--sherri--shang/2911-3

Maybe she has 1.8 clients.

great news! and luckily for steve and pam there are 1.3 billion chinese. so business should be good for a while.

MidtownerE
Chinese do share rooms better...

what's funny is i remember the exact same spiel, possibly word for word, but with "russians" instead of "chinese". i can even vaguely recall the qoute, something like if you had a client on the phone with a hint of what you think might be a slavic accent, you put them on hold and screamed out at the top of your lungs "I HAVE A RUSSIAN!!" and everyone at the office dropped what they were doing and gathered around for some reason, not sure why. emotional support? which is fine, but you know, just keep in mind there are only 2 bric countries left.

steve, if you're for real, just sell the studios to the next chinese guy. stop chinese people on the street and offer them your apartments. don't think of it as a permanent loss, in fact don't think about it at all, just get rid of them. there is no more money coming down the pipe, it's over. our democratically elected leaders gave you this opportunity to cover your losses, maybe stash away a little bit, and develop a new strategy. do you understand this? but they can't help you anymore. there is just no more money.

again, if you're for real, being a positive person doesn't mean denying or ignoring bad things. it's the opposite, it's understanding bad things - and having a plan. that's what makes one a positive person as opposed to an airhead.

lucy...maybe u might want to should shut it down? I'm just lookin out for ya kid!

a threat? from stevef? that's kind of cute. whatever, keep your studios. was just looking out for YOU kid. what do you care what i post anyway? surely a smart guy like you carries more weight than a silly kid like me. go ahead, move forward with your threat. you coming over? i'll make a nice cheese plate.

no no no lucy, I meant shut it down for your own mental health. I really could care less what u post but you seemed to be on the edge a little......Although I can run a 400 in 62 secs and bench 250 for reps I'm mostly a lover not a fighter. :)

i AM curious though, what is it that you think you can do to me?

oh i see. no, i can't. i am very anxious about the state of things and you will just have to deal with me until i feel better. please feel free to put me on ignore.

"Although I can run a 400 in 62 secs and bench 250 for reps I'm mostly a lover not a fighter."

good to know. i can shoot a gun. not a very good runner though.

pfr ?

lucy, nice to know u. I hope I wasn't too obnoxious but the bears on these boards will attack without mercy. I've kept my guard up maybe once to often? like now possibly?

Stop being a hater, bjw. Of course she has no sales listings. Her clients are _buyers_.

I like the Chinese cash buyer personally. I mean who else would pay $3.5M for an apt with $4500 in montlies and then turn around and rent it for $8000? A 1.2% return on cash, down to 0% once you amortize transaction costs. God bless them.

> and bench 250 for reps

zero reps, impressive.

"I really could care less what u post but you seemed to be on the edge"
-steveF

lol...

Flih now or be fliced out flalever!

talking about your bench press makes me that stevf is actually west67.

67, looks like your classic 7 will be a pied a terre for a cement factory owner from the shanxi province.

If the OP is true the I would be afraid. If the Chinese can no longer find places to invest in their country and the smart money is trying to sink it into Manhattan RE then that is not a strong vote of confidence in China. And if the Chinese domino topples it will crush much of what is in it's way.

Av - I wouldn't think about it as Chinese voting against China but more as a partial hedge on their China risk. Imagine you're a Chinese entrepreneur. You've made a bunch of money - maybe all legit (reportedly rare), maybe some legit/some not so much (common), maybe not at all legit (reportedly also common). You believe that China is the future and want to continue riding the wave, but also realize that nothing is certain (it's a developing economy, government can be capricious, taxman is pesky, etc., etc.) and that it would make a lot of sense to put a little something away for that rainy day where you might suddenly find it advantageous from a staying out of jail perspective to hop a flight to the US on a "business trip" and never get around to coming back.

Since you made all that money, the "little something" that gets some of your eggs out of the China basket might be a few million bucks, just enough to buy that nice new condo in Manhattan. If the whole China thing goes to hell, it's either a roof over your head or a hard asset piggy bank that you can sell to raise cash, depending on what you need at the time. In the meantime, you can rent it out on inonada's numbers above and get a 1.2% cash return that is entirely acceptable given your goal of getting money offshore and doing no worse than break even on monthly cash flow.

The best part about the whole thing is that you have title to a hard asset that the Chinese government and your company's creditors can't take away from you, unlike what they can do to your business and onshore financial assets, not to mention your personal freedom, if something goes wrong. The apartment is denominated in US dollars, which sort of sucks for you since the dollar is depreciating against the renminbi, and Manhattan real estate might tank, which would also suck, but you're thinking to yourself, "What's the worst that can happen? Dollar goes down 10 or 20%. Apartment falls maybe 20%. So I'm down 30 or 35% in renminbi terms but I still have the rest and it's offshore and in my name. Not so bad."

The point is that any loss on the purchase, or for that matter the opportunity cost of having that capital stranded earning inonada's rental math, is just the insurance premium that the buyer pays to buy the protection that they want. People talk about flight capital buying a hard currency asset. I don't think that's the point. People aren't looking for dollar denominated assets, they are looking for assets denominated in property rights and rule of law.

"...it's offshore and in my name" - Or, if you're careful about it, in the name of your wife, or your daughter who's a sophomore at NYU, or an LLC that you set up with your US lawyer appointed as the managing member and your name nowhere to be found. Etc., etc.

this article is from 2009

http://www.chinadaily.com.cn/bizchina/2009-08/22/content_8602900.htm

this one is from 2010

http://www.dailytelegraph.com.au/news/national/chinese-government-buying-up-our-farms/story-e6freuzr-1225881085302

would you say this influences your point of view in any way?

lucille - was that question for me?

for you, but also for anyone who wants to chime in

OK. Then the first link is an example of flight capital going to another desirable global city. Just substitute "Sydney" (or "London" or "Vancouver" or "Singapore" or wherever else Chinese buyers want to own real estate) and for some markets "house" for "condo" in my long post and you're good to go.

Of course the long post is somewhat tongue in cheek. Not all the buyers are dodgy entreprenuers. Some are emigrants and really are leaving China - see AvUWS's point above. Some have so much money that they can buy toys like Manhattan apartments just because. Maybe some really see the property as an investment, although in that case see inonada's post about economics. I do think that it's rare that the buyer is investing in overseas real estate simply for want of opportunity to invest in something in China.

The second link is about the Chinese government buying farmland. This is a different phenomenom - more like the government or government-owned companies buying up oil reserves, copper mines/mining companies, timber planatations or whatever other natural resources. I don't see this as similar to purchases of residential real estate by individuals

http://www.youtube.com/watch?v=SIzbMT2NVDA

"The modern equivalent of building pyramids"

Given the investment property bubble over there, I'm not sure what to think about the decision of Chinese investors to send their money this way . . .

sls, so you've explained why chinese are buying real estate outside of china. fine, not up for dispute. i'm not seeing your explanation how this translates to chinese buying real estate in manhattan. in fact, i find it troubling that they've been shopping around for real estate for years, and are only now making their presense felt here. why is this? why are we their last choice?

as far as the other article, you're right, it has little to do directly with residential real estate. but tell me if you don't find this troubling.

this article from 1/11

"The Chinese agreed to buy $45 billion worth of U.S. exports, as well as invest more than $3 billion in the U.S. operations of Chinese firms."

http://www.voanews.com/english/news/usa/Chinas-Investments-in-US-Are-Growing-114281464.html

compared to this figure from 2009

"In 2009 China surpassed Japan to become Australia's largest export market, with total merchandise exports to China valued at A$42.4 billion, an increase of 31.2 per cent over the previous year."

http://www.china.embassy.gov.au/bjng/relations2.html

now, i may be misunderstanding someting here, but it seems pretty straight forward. where would you say the chinese are puting their "eggs"?

"The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010"

http://en.wikipedia.org/wiki/Economy_of_the_United_States

"The economy of Australia is a developed, modern market economy with a GDP of approximately US$1.2 trillion"

http://en.wikipedia.org/wiki/Economy_of_Australia

the chinese are not coming to save us. NOBODY IS COMING TO SAVE US.

what happened to your conspiracy theory? i thought its all part of a grand plan started by a small group in 1923.

“some in the $30-million-plus range.”

Exactly the range your studios are in, eh spunkster?

this is your contribution to the thread?

more from the voa link

"Most of the Chinese investments in U.S. operations are at manufacturing plants, such as for solar panels or automotive parts. But the Chinese also have invested in a martial arts theater and a sporting goods company in the U.S."

"Trade between China and the U.S. totaled more than $400 billion last year.(remember that 45billion they buy from us from a few paragraphs above?) But that figure is dwarfed by the amount of U.S. debt held by the Chinese – more than $895 billion at the end of last November. China holds the most U.S. government securities, topping the $877 billion held by Japan."

http://www.voanews.com/english/news/usa/Chinas-Investments-in-US-Are-Growing-114281464.html

You talking to me? I thought my contribution was very interesting.

No the Chinese aren't going to rescue us, not in real estate or anything. They're suffering their own crash right now, & their economic model is coming apart at the seams, just like Europe and everywhere else.

The only one left is the Irish Carpenter.

>> “This year, it’s the biggest buzz word in real estate: ‘Chinese.’ ”
>And a couple years it was "irish carpenters". How did that pan out?

Seriously? Comparing China and Ireland? Comparing Chinese upper class wealth with Irish blue collar wealth?

>No the Chinese aren't going to rescue us, not in real estate or anything. They're suffering their own crash right now, & their economic model is coming apart at the seams, just like Europe and everywhere else.

They will not rescue us, you are correct. But there is huge wealth there, and many will buy trophy properties in Manhattan, just as in sidelinesitter's scenarios.

What SLS said. In the last 100 years, the Asian diaspora has found it handy to have assets in the West and have found them useful when sh*t hits the fan (1949, Indian expulsion from Uganda, fall of Saigon). It's not going to rescue the NYC market or Sydney market or Central London market, blablablablabla from their excesses. What the article was about is the significant presence they form as a fraction of various niche markets. As they have for a long time in different markets (Vancouver, Sydney, London) through market peaks and troughs.

Racist.

sls gave a very simplistic generalized explanation why chinese might like buying in america in general and new york in particular. i explained that generally and simplistically speaking, there is an "america" and a "new york" much closer to them, it's called australia and their largest city sydney, and it has and will continue to serve the needs descibed by sls just fine. they're coming here now in small but loud numbers, fine. but my point, which i again probably didn't make very well, is that they just don't seem to consider new york as special and unique as people who either own or sell new york real estate.

It would be interesting to hear Carrie Chiang and or her team to chime in - I heard their buyers are predominantly from China.

Is Carrie Chiang related to Linda Chang?

that would be very informative. specifically, where else do these potetial buyers own? if this is their initial entry into manhattan market, why have they chosen now? is it very simple like they didn't have $ before and now they do so they're here? or had they been waiting for a particular indication of some sort which makes this a good deal for them? is there a reason they are choosing new york over the super cities in asia and pacific? purely trophy or is there a logic there? nothing personal or inappropriate like where their money comes from, just their real estate mo.

SLS- You are so right on. I do business with one guy who is Taiwanese, operates a factory in Shenzhen, trade office is in Hong Kong, and bank account is in Cayman Islands. Who do you think he pays tax to?

Also, you can’t compare what’s happened in China with last decades Russian mobsters, or previous decades Japanese. This time it’s really a big deal.

I love Chinese food and I hope that you do too.

@SteveJhx
Trying to be funny, you Xenophobic fvck?

"Who do you think he pays tax to?"

not new york state?

and please keepin in mind

http://www.heritage.org/research/reports/2011/01/china-global-investment-tracker-2011

lucy - I don't see any reference to Chinese individuals buying stuff here so I don't think that the report is relevant to this topic. "The Heritage Foundation is the only publicly available, comprehensive dataset of large Chinese investments and contracts worldwide beyond Treasury bonds. Details are available on well over 400 attempted transactions -- failed and successful -- over $100 million in all industries, including energy, mining, transportation and banking."

oh ok, well, you're you must know what you're talking about. of course, from the nytimes article linked in the op:

"Chinese banks have poured more than $1 billion into real estate loans in New York City in the past year. "

"Delegations of Chinese officials and executives have been sweeping through the city, "

"Last month, officials and executives from China and the United States filled a ballroom at the Waldorf-Astoria to make deals during a business conference. "

"Even one of the region’s fastest growing construction companies is Chinese. The company, China Construction America, has won contracts on major public works projects, including the Tappan Zee and Alexander Hamilton Bridges, the No. 7 subway line extension and the $91 million Metro-North Railroad station at Yankee Stadium.

China Construction is a subsidiary of a state-controlled construction company in China. "

"The Chinese government is acutely interested in diversifying its foreign exchange reserves beyond United States Treasuries. One sign of this is the push by Chinese state-run banks to invest their money in commercial real estate in New York City. "

"In one of the largest loans by a single lender in the city since 2008, the Bank of China lent $800 million late last year to refinance a building on Park Avenue housing JPMorgan Chase and Major League Baseball, analysts said. Among other deals, the Bank of China recently agreed to lend more than $250 million to refinance an office tower at 3 Columbus Circle. "

so..what were you saying again?

also, i don't remember giving you permission to call me lucy, and it's very rude to just assume. so you won't be doing that again.

Sorry for the familiarity. I’m in trouble over at the Porsche board for similar transgressions. Seems like you’ve assumed the ar mantle?

aww, it must be tough going through life being such a wimp. no one is assuming anyone's "mantle". ar used to comment on every single thread. i don't do that.

Like Zippy the Pin Head picking up where Einstein left off.

lol! that's your best one yet, falco! see? funny just takes practice.

hi ar! hope you're well. whatcha been doing with yourself? emjoying the summer?

There's mainland China and there are the Chinese. Different things. Prior to Deng Xiao Ping, there was no mainland China money, other than the circa-1949 flows. A small but influential KMT elite sought refuge in NYC. Lots of "Chinese" money from HK, Spore, various SE Asian countries with large Chinese diasporas seeking foreign residences. Prior to the 1980s, many of those buyers sought (and still seek) London residences.

In the great panicky years leading up to '97, many HK Chinese and to a smaller extent other SE Asians sought permanent residency (and citizenship) in Australia & Canada. Right after the U.K. took away the right of abode for HKers. I would argue that they weren't attracted to Sydney and Vancouver for any love of those cities beyond the need for long-term bases in those countries.

Prior to this new GC program in the U.S., it has been very hard for a foreigner to gain permanent residency in the U.S. compared to Australia & Canada. Also, much of the housing desired by the "Chinese" (again, remember, not all mainland) has been driven by the enrollment of their children at local universities. Aus/Cdn tuitions are much lower than comparable tuition at U.S. institutions. And for many years, an Aus/Cdn undergrad was an easy segue to permanent residency in those countries. Ditto UK to a smaller extent.
And the NYC market (surprised nobody brought this up) has consisted mostly of co-ops! Not exactly foreigner-friendly.

so you're thinking in manhattan it WILL be limited to a small number of trophy condo apartments? and an easily ball parked number of pied a terres bought (1)as corporate apartments and (2) by individuals who are launching businesses here? sorry to put words in your mouth, but that's pretty much what i think about this. as far as mid price private buyers, i would think they will focus on HOUSES near manhattan in outer boroughs or the suburbs. sounds like you know what you're talking about (and sounds like you're only one), what do you think about this: if they are seeking a base in the us, doesn't it make sense that they WILL NOT have much interest in small expensive apartments in manhattan, but rather larger homes that could serve as a base for THEIR FAMILIES?

that is outside of a small number of trophy shoppers, and let's not forget, the trophy shoppers have been collecting trophies around the world for years already. so we can't just look at the number of super rich in china and think it has anything to do with new york.

You broke Americans/NYers, if you can't support your global city economically then others will gladly oblige!

"so you're thinking in manhattan it WILL be limited to a small number of trophy condo apartments? and an easily ball parked number of pied a terres bought (1)as corporate apartments and (2) by individuals who are launching businesses here? sorry to put words in your mouth, but that's pretty much what i think about this."

Ehhh, not so much.

"In about two years, what was at first a trickle of inquiries has grown to a stream of freshly minted high-net-worth Chinese businesspeople hunting for condominiums for $500,000 to $10 million and up. The average purchase is a one-bedroom apartment for about $1.45 million, said Pamela Liebman, the chief executive of the Corcoran Group.

Most of these buyers are seeking apartments for personal use, either as pieds-à-terre or as housing for children studying in New York. The majority of the sales fall at the lower end of the luxury spectrum, but in one case a parent spent $20 million on an apartment for a daughter at college in Manhattan, Ms. Liebman said."

and I especially like this bit:

"Most new buyers are not interested in properties as trophies, he said. “They focus on yes, I might want it for my own occupation, but they always ask where the investment rationale is for buying the property,” Mr. Palmer said."

http://www.nytimes.com/2011/08/14/realestate/wealthy-chinese-turn-to-new-york-for-luxury-condos-posting.html?_r=2

way ahead of you sls! from the other thread

this article ranges from funny to shocking.

"In general, Chinese buyers prefer condos to co-ops. “It’s a fair challenge getting them to understand the co-op system,”

so it's that they are limited to condos being, they are just too stupid to understand the co op system?

"Culturally, Asians are loan-averse, thinking that coming to the table with less than the asking price will reflect negatively on them"

hhmmm. uh, what?

other things in new yorks favor for the chinese are our fresh air and family friendly corporate culture.

the average cited does sound promising, but it could be an average of 2 sales. right? of course that one guy did spend 20mil on his daughter's place. as far as the investment rationale, other posters here are better equipped to mock that one using the appropriate jargon. i just mock common sense things.

This is all quite funny considering every real estate property in China is on a government land lease.
Not to mention the intricate system they have for exporting goods, requiring factories to have a sort of Co-op with an export licensed company.

Test----UP

Am I the only one not having the 2 "chinese" threads refresh to the top of the threads list?

http://www.youtube.com/watch?v=JbnjusltDHk

stupid turdmonkeys.

how was that offenssive!!!?? it's anatomy! lsdjkfn

truth - things get misunderstood. The export licensed co is nothing more than a shipping agent, UPS and FedEx do this as part of shipping procedure. Completely transparent. Exporting goods from China very easy more than you can imagine.

ieb
Yes, so easy a caveman can do it. That's true for today.
What you describe is for the last 10 years.
Ive been traveling to and exporting from China since 1991. I was the only american in any town then. The only westerners were german and italian. All engineers excited that they were going to sell each factory 100 machines each. Usually didnt get past 5 machines as 3 were put in production and the other 2 dismantled and copied as yes, chinese particularly then had no concept or care to enforce intellectual property.

Point was the concept of NYC co-ops is hardly a strain on the asian brain.

Was wondering what happened to your reply.

Your other point about land lease is correct and Hong Kong has always had this model and China adopted it. The 99 land year least never stopped the Hongkongese from bidding up real estate.

Of course today with the news of the Europeans not getting it together with a euro bond only reinforces the fact that the US will for so many reasons be the safe haven for Chinese with money.

We share a common future.

ieb, re mantles, usually one would hope it was done less transparently. There should be a "username" raised to the power of the new generation. Also one could keep track of personalities, histories. sexes, etc. Thank you SE. Still hiring? I want to be considered for "Riversider".

I am "The Curator" .

ieb, I would enjoy taking over the archival aspects. I'd also be a great Riversider. With a bit of luck, I may even live up to the moniker shortly. In any case, I would welcome the opportunity to be in quality control.

gaga - you have my vote. Someone's got to do some housekeeping around here.

I think gaon means genius, .... good job ieb reducing a genius to gaga.

"Someone's got to do some housekeeping around here."

pick me!! i shall be The Cartman

http://www.youtube.com/watch?v=4rtwb34Pd1k&feature=related

i'm also open to being Cartman the Dawg

http://www.youtube.com/watch?v=Zhys09Yi-14&feature=related

of course they'll probably delete that one because it has a bad word in it. so here, watch this while it still lives

http://www.youtube.com/watch?v=2mJxTmyZFHU&feature=related

ieb
Yes sorry, for whatever reason this thread doesnt refresh to the top for me,so forgot about it.
I was considering buying a new construction condo in Dongguan some years ago. Around $60 per square ft. The combination of the land leases, I a foreigner, and the potential of a greatly fickle government kept me away.

If someone with balls wanted to invest on Chines property, I'd look to the coastal beaches. They don't have the runup on coastal properties as chinese culture doesn't rush the beach as we do. If China does progress as some believe they will, the international tourism will explode these places making them great investments.

Ate lunch at sunset beach, shelter island tres happy