Foreign Buyers

>" Brokers say wealthy home buyers in America and abroad are viewing New York luxury properties as a “haven for wealth” during rocky economic times."

That's nice, what do the wealth management folks say?

fits into what is happening in the market that good properties in good locations and nice buildings are going like hotcakes. Not so good locations are not fairing nearly as well. Also this has an effect of boosting per sq ft realized price.

Are you inthe market for a $35MM property?

These are not good properties they are trophy properties, big difference. And these buyers will not save anything they are so far removed from what is happening on the ground and real people trends. These purchases are fun for gawking, like hey, look at that clown with his 35 mil apartment in hell's kitchen north, but not much else.

You know lucille, these people buying $35MM properties could rent after all. Following the inododo 6 step plan, they could probably get the $35MM place for only $83K / month which would be a bargain.

Also this has an effect of boosting per sq ft realized price.

deserves repeating

What does it signal about a market when the buyers of last resort are the ones buying?

Ppl spending $35MM are buyers of last resort?

"Following the inododo 6 step plan, they could probably get the $35MM place for only $83K / month which would be a bargain."

Alas that market is beyond my grasp, but a quick browse shows a $50M place for $60K a month:

http://streeteasy.com/nyc/sale/675166-condo-25-columbus-circle-lincoln-square-new-york
http://streeteasy.com/nyc/rental/863505-rental-25-columbus-circle-lincoln-square-new-york

A price-to-rent of 70x.

Well there you go, and I didn't even have to look, it was done for me. Pretty nice service you get at this price point.

"Ppl spending $35MM are buyers of last resort?"

for someone talking up the market, sure. very rich foreigners buying in buildings specifically marketed to them are last resort.

money laundry

That's not the definition of the buyer of last resort.

Important to remember that Manhattan has grown into a city where international and domestic as well as local buyers of strong net worth wish to invest their money in. This is actually happening at the moment at many price levels, not just the super-prime luxury level. Was at a development on the East side today and approx 30-40% of buyers were international - 30% domestic (non NY) and the balance already NYer's moving from other luxury buildings. Real estate is an established part of High Net Worth Individual's overall investment portfolio. In part because it does not reduce to $0 in most cases. For foreign investor's Manhattan still provides a relatively secure (politically and financially) investment as well as a prudent one - Manhattan real estate while pricey by local standards, still remains below top world city's prices (for prime areas). On the entry-level and $1.5M and under market - higher rents have caused many to re-think their rent vs. buy decision adding fuel to that segment of the market. The "market" in Manhattan is not "one" market - it is many micro-markets depending on location, property type and price point/size.

With the "crisis" brewing in Europe, it is not a surprise that "high" networth individuals are scooping up real estates "outside" of Europe to "protect" their money. Two questions I always wonder

1) Exchange rates
2) Global deleveraging.

Re: exchange rates, Europeans are in a lose-lose proposition :) First lost, Euro/USD is going the wrong way for them so they are buying less with their Euro today. Then comes time to "sell", and we can use history as a guide that FX trends don't reverse quickly, Euro/USD will still be going the wrong way in the next few years unless these buyers intend to buy and hold until their grand kids are ready for college in the US. Therefore, lose when they buy, lose when they sell. Nice way to "protect" your money.

2) Global deleveraging is actually causing foreigners to "repatriate" their domestic currencies, not send them abroad. I know and heard of a few Europeans, small sample-size to keep in mind, selling US real estates solely because of the European crisis. They need to stay liquid and what's the best way to do that ? Convert your mostly illiquid, i.e., real estate holdings, into liquid Euros to meet whatever obligations you currently are facing.

Therefore, when I hear foreigners buying, I am sure that will be the case forever for a city like NY but will these buyers become "irrelevant" in the big scheme of things down the road when the above 2 points are taken into consideration. I believe so. You can't consider the "ultra high networth" because they are in a different world. We're talking about the target market between 1M-3M.

With the "crisis" brewing in Europe, it is not a surprise that "high" networth individuals are scooping up real estates "outside" of Europe to "protect" their money. Two questions I always wonder

1) Why so many words in quotation marks?
2) Why "so many" "words" in "quotation" "marks"?.

Re: exchange rates, Europeans are in a lose-lose proposition :) First lost, Euro/USD is going the wrong way for them so they are buying less with their Euro today. Then comes time to "sell", and we can use history as a guide that FX trends don't reverse quickly, Euro/USD will still be going the wrong way in the next few years unless these buyers intend to buy and hold until their grand kids are ready for college in the US. Therefore, lose when they buy, lose when they sell. Nice way to "protect" your money.

You ought to reread what you "wrote" and "reconsider" your ""logic"", it "fails" on several levels.