From: "Richard Nunez-Lawrence"
Subject: Foreign Buyers Take Manhattan
Foreign Buyers Take Manhattan
Heekyung Kim, right, and her family bought a two-bedroom at the Avery.
Her father and mother, Youngchul and Namjoo Kim, and her sister Yeonjung,
live in Seoul.
Seokyong Lee, left; Jennifer S. Altman, right, both for The New York Times
By CHRISTINE HAUGHNEY
Published: November 4, 2007
KENNY TIMMONS has spent three long weekends in New York City since 2003, catching up with friends he knew in Ireland, visiting ground zero, restocking his wardrobe at Armani and Niketown and chatting about real estate with a bartender in an Irish pub in Midtown Manhattan.
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That was enough of a glimpse of New York for Mr. Timmons, a 32-year-old carpenter from County Meath, Ireland. Last summer, he put down 10 percent on a $760,000 studio under construction at 75 Wall Street.
Mr. Timmons has never seen the apartment and does not plan to live there. Instead, he hopes to rent it out for $3,000 a month when it’s finished next year and eventually to sell it at a profit.
He predicts that a Wall Street address will always be in demand. “If you can’t rent on Wall Street, then where can you rent?” Mr. Timmons said. “It’s one of the biggest business areas in the world.”
This enthusiasm for Manhattan real estate isn’t felt by just a few enterprising foreign buyers. Real estate brokers say that they are seeing more sales to foreign buyers than ever before and that these buyers are helping to fuel the Manhattan market.
The increase in demand comes as a new tide of high-rise condominiums is hitting Manhattan. Buyers from other countries who don’t have credit histories in the United States or who do not intend to use their apartments as primary residences have historically had trouble passing muster with co-op boards. But condos pose no problem for foreign buyers, and they often find that buying in Manhattan is less expensive than buying a comparable house or apartment in cities like London.
Jonathan Miller, an executive vice president and the director of research at Radar Logic, estimates that foreign buyers have bought about 1,000 newly constructed or converted condos in Manhattan in the last 18 months, which is about a third of the condo sales in Manhattan in that period.
And while in the past an influx of foreign buyers could often be traced to boom times in a particular country, brokers say that the interest in Manhattan real estate is now worldwide, with buyers from Australia, Korea, Russia, Israel, Italy and Colombia.
“In the late ’80s, we totally depended on the Japanese market,” said Louise Sunshine, development director for the Alexico Group, who has sold apartments to foreign investors for more than two decades. “It’s a diversity of a different kind. There’s a huge amount of new wealth everywhere.”
In her work on several Manhattan condo projects, Ms. Sunshine sees this changing market up close. Buyers from five continents inquired about condo suites at the Mark Hotel at 25 East 77th Street, she said, and people from Dubai, Indonesia and Portugal bought apartments at the Laurel at 400 East 67th Street.
Manhattan real estate is also benefiting because buyers have lost confidence in other United States markets, especially Florida. “There is the fear factor that prices are going to go down even further,” especially in Miami, said Jacky Teplitzky, an executive vice president at Prudential Douglas Elliman.
She said that she had seen a 20 percent jump this year in inquiries from Latin Americans about the Manhattan market and recently, more inquiries from Eastern Europeans, specifically Russians.
Some buyers first learned about boom markets in their own countries. Mr. Timmons rose through the ranks, handling the carpentry for 1,000 houses built by Hollioake Homes, a construction company in Ireland. He built another 11 homes on his own to resell.
Now that the Irish housing market is slowing down, he has been buying condos under construction in Dubai, London and Warsaw. He read about the Manhattan market in an Irish newspaper and to find his apartment here, he worked with a Dublin broker, Kyle Thomason, who is also licensed to sell real estate in New York. Mr. Timmons said he plans to work for another 10 years, pay off his mortgages and then live off his rental properties.
Ms. Thomason said that Mr. Timmons is like many of her clients in Ireland who view these properties purely as investments. They typically don’t ask quality-of-life questions — about schools, for instance. “It’s all based on what their rental yield is going to be,” she said.
Not all buyers are investors, of course.
After Ana Maria Ruiz, 22, who is from Bogotá, Colombia, got an internship at the Colombian Government Trade Bureau in New York, she needed a place to live. Her parents, who run a general hospital in Bogotá, tried to rent an apartment for her, but decided against it because of the costs involved and because they had no credit history in the United States, which put off prospective landlords.
Renting a studio for a year in one building would have been expensive: $33,600 in rent, with half of that amount paid upfront, plus an $8,400 broker’s fee.
“My mother said that renting was like throwing your money in the trash,” Ms. Ruiz said.
She added that her mother, Clara, already had some experience in foreign investment. She is making almost $1,600 a month renting out a one-bedroom apartment she bought near the Louvre in 2006, Ms. Ruiz said. And since the weakened dollar had made the Colombian peso more valuable, her mother decided to buy an apartment in New York where Ms. Ruiz could live for a year.
With help from their broker, Jamie Breitman of Bellmarc Realty, the Ruizes found a $499,000 studio at 145 East 48th Street, with a view of the Chrysler Building. Clara Ruiz arranged for a $100,000 mortgage through Merrill Lynch, where she had a private banking account. Once her daughter moves out of the apartment, Mrs. Ruiz hopes to rent it for $3,000 to $3,500 a month.
Brokers say that Korean families who are buying Manhattan apartments typically use them for relatives to live in rather than as rental investments. So they sometimes hold out for features they would expect in their own homes.
Youngchul Kim and his wife, Namjoo, first began looking for a Manhattan apartment in 2003 when their middle daughter, Yoojung, 31, began working as an architect here. Mr. Kim invests in Korean real estate, and his wife has a practice treating patients with acupuncture and herbal remedies.
But the Kims were a bit perplexed by what passed for luxury in Manhattan. They wanted to buy something new and didn’t understand why people would pay a premium for a prewar apartment. But then their daughter moved to Hong Kong, so they suspended their apartment search.
Last year, the Kims’ youngest daughter, Heekyung, moved to Manhattan to work for a venture-capital firm, so the family started apartment-hunting again. “A lot of Korean people automatically associate westernization and modern architecture with luxury,” said Ms. Kim, 26. “For them ‘safer’ is new construction.”
The Kims first gathered information about condos at a presentation held in Seoul by Neal Sroka, a broker with the Corcoran Group.
Mr. Sroka mentioned the Avery at 100 Riverside Boulevard. They studied the project’s Web site and liked the fact that it showed the views from the apartments. The Kims were also able to talk to friends who had bought real estate in Manhattan, and they were able to take advantage of new South Korean government rules that allow citizens to invest $3 million abroad, instead of $1 million.
This summer, the Kims helped Heekyung buy a $1.5 million two-bedroom at the Avery with views that rival their views of the Han River from their apartment in Seoul. Their oldest daughter, Yeonjung, 32, may relocate from Korea to live with her.
For some buyers, New York itself is the main attraction, and they like the fact that they can buy apartments in buildings that are recognizable around the world from books and movies. Dr. Nick Kotsomitis, a 39-year-old orthodontist from Brisbane, Australia, owns 16 investment properties in Australia and in Greece.
After Dr. Kotsomitis was invited to work in Manhattan for part of the year, he decided to buy. With help from a family friend, Jimena Yudi, a broker at Citi Habitats New York, he chose a $1.885 million studio at the Plaza over larger one- and two-bedroom apartments that cost even more elsewhere.
He felt that an apartment at the Plaza would hold its value better than larger apartments in lesser-known buildings. “I have a lot of investment properties, and none of them have books about them,” he said. “They filmed ‘Crocodile Dundee’ here.”
In his case, the currency markets set him back. He ended up paying more when he signed the contract in August than he would have paid today because the Australian dollar has strengthened in the interim, but he says he is still happy with the purchase.
But foreign buyers quickly learn that there are limits to what they can buy in Manhattan, because it is difficult for them to get into co-ops, which make up about 70 percent of the Manhattan housing held by individual owners.
When Nick Ayer moved to Manhattan from London, he was looking for a writing job and a way to invest a £500,000 inheritance (about $1 million). He made a cash offer of $700,000 for a one-bedroom co-op in Chelsea.
The sellers accepted the offer, but the co-op board refused to meet with him. He said he believes that although he has United States citizenship — his mother, Dee Wells, was American — he had no credit history in the United States or steady income beyond the inheritance from his father, Sir Alfred J. Ayer, the philosopher and logician.
Still, he wanted to take advantage of the weak dollar and buy an apartment. His agent, Andrusha Bohackova of Bellmarc, helped him find a $668,000 one-bedroom condo at 230 Riverside Drive. He moved into the apartment in April and says he’s happy with his investment — for now. He hopes to sell the apartment eventually, move to France or the Amazon and live off the profits. “My money increased 100 percent by just coming over here,” he said.