Chinese buyers gobble up NYC luxury apartments, many with cold, hard cash
The apartment numbers are said to invite prosperity, and the feng shui is more attractive than the quality of the countertops. In midtown Manhattan, a new crop of luxury skyscrapers is rising, and many of the prospective buyers are wealthy Chinese who can pay in cash.
At a time when the Chinese government is discouraging lavish displays of wealth, and the country’s property laws and high tax rates on real estate are dampening investment at home, a growing number of high-end Chinese buyers are looking to snap up trophy apartments in New York City.
Analyzing chatter on Weibo, the popular Chinese social-networking site, and talking to real estate brokers in Manhattan, Vocativ found that these wealthy buyers seem to want a taste of luxury with a view and a prestigious foreign address at which to park their millions. ”New York City real estate is seen as a safe haven,” says Jacob Frydman, the chief executive of United Realty, an private real estate firm based in New York. “The apartments…function as a dollar investment that might protect holdings against the negative effects of Chinese monetary policy.”
The growth began roughly four years ago, according to the National Association of Realtors, when the N.Y.C. housing market was still recovering from the Great Recession. At the time, buyers from China accounted for only 5 percent of international real estate sales in the United States. Today that figure has climbed to 12 percent, and buyers from China are now the second largest group of non-Americans purchasing U.S. real estate (Canadians are still the first). The growing interest from China has even spawned Juwai, a dedicated Chinese-language search engine for people looking to buy property abroad.
Meanwhile, here in New York, a handful of developers are catering to wealthy Chinese buyer by reportedly installing wok kitchens, which feature powerful exhaust fans to absorb the fumes generated by oil-heavy cooking. They’re also advertising apartments with the number 8, which some Chinese buyers see as lucky because it sounds similar to the Mandarin word for prosperity.
Perhaps most notable among these developments is One57, a new 90-story glass tower overlooking Central Park where two units recently sold for $90 million each, but not to Chinese buyers. ”(My Chinese clients) already know about One57 before they come to talk to me,” says Jennifer Lo, a broker at Prudential Douglas Elliman.
One57 is not yet complete, but the vast majority of the units have been sold, about half of them to foreigners, brokers say. Several full-floor apartments have already gone into contract with Chinese buyers. One, on the 88th floor, reportedly went to a Chinese buyer for $50 million. Not all the sales are public, but clothing entrepreneur Silas K.F Chou, a Hong Kong billionaire (number 704 on Forbes’ billionaire list) whose company has interests in Tommy Hilfiger and Michael Kors, has reportedly purchased an apartment. And the HNA Group, a Chinese conglomerate involved in aviation and logistics, has reportedly bought four units, including two full-floor apartments.
Then there was a $6.5 million sale that sounded like something out of The Onion: A Chinese woman is said to have told her broker she was purchasing a unit for her 2-year old daughter, in hopes that she’ll one day attend an Ivy League school and need an apartment nearby. The real story was a little tamer, at least according to Kevin Brown, senior global adviser for Sotheby’s International, who represented the buyer in that sale. He has nothing but praise for his client. “She’s very typical of the best of the Chinese customers who are coming our way these days. They are extraordinarily knowledgeable. They do their homework. They are prepared to get on a plane and fly over for 24 hours. It was only a little sidebar that she happened to have a child,” he says.
Either way, the sale received a lot of attention on Weibo, China’s micro-blogging site. “Good mother,” reads one post. “This mother really has a good eye, she bought New York’s top real estate One57,” reads another.
Brown says Chinese buyers make up about 20 percent of his clientele—a figure that’s doubled since last year. “When we started, there was only the odd sale here and there [to Chinese buyers],” he says. “I think it’s because we have product now. It also takes time to establish relationships. I have never seen a Chinese buyer act on a whim.”
Some brokers like Brown and his Sotheby’s partner, Nikki Field, are working hard to understand their new Chinese clientele. Both travel to China about four or five times a year to meet with potential buyers. They also learned basic Mandarin and took courses in language and culture, and wound up hiring their professor as a translator.
Brokers in New York City are also using Chinese social media to spread the word about One57 and other apartments, playing up the buildings’ amenities. One posted a floor plan of apartment 60B on Weibo, emphasizing the layout. He points out that the master bedroom is optimally placed around a corner at the end of a hallway, not directly open to the rest of the apartment. That design is reflective of good feng shui, the ancient Chinese practice of balancing the energy at home to ensure health and prosperity. “Traditionally, Chinese investors always focus on feng shui of the building,” says David Wei, whose company Four Seasons International Exhibition stages international real estate expos in China each year.
The National Association of Realtors seems to agree. In “Riding the Wave of Chinese Wealth,” the group’s how-to-guide on breaking into the Chinese market, one of the tips is “learn a little about feng shui.”
With so much money at stake, it is not surprising that developers are going to such lengths to actively court Chinese buyers. “China over the last couple of decades has been like one of those glass boxes you see on game shows,” says Andrew Taylor, the co-chief executive of Juwai.com. “Money is flying around in the air and the people inside the box are grabbing it as fast as they can. Now, they want to invest some of that money overseas, which is one reason so many are buying property in New York.”
If anything invites prosperity, it’s owning real estate in New York City. At least for the few who can afford it.