Global homebuyer hot spot: New York County, N.Y. (Manhattan)

Editor’s note: This report on the New York County, N.Y. (Manhattan) market is an excerpt from a special report by Inman News reporter Andrea V. Brambila, "10 Hot Spots for Global Homebuyers" identifying the 10 markets with the greatest share of buyers with a foreign mailing address in the public record between May 2011 and January 2012. A recently released report from the National Association of Realtors found New York was the sixth most popular state in the U.S. for international sales in the 12 months through March 2012.

Nearly 4 percent of homes purchased in New York County, N.Y., between May 2011 and January 2012 listed a foreign mailing address on the property deed, according DataQuick. New York County’s borders are identical to those of Manhattan, one of the five boroughs of New York City, including Manhattan Island and several small adjacent islands.

Per DataQuick’s analysis, foreign buyers did not account for even 1 percent of homes sold during that period in any other county other than New York County in the New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa. metro area, which consists of 22 counties and is the most populous in the country.

In 2010, nearly 29 percent of New York County’s nearly 1.6 million inhabitants ages 1 and up were foreign-born — the second-highest share among the 10 markets. That same year, the county also had the highest share of people who had moved in the past year who were foreign-born and moved from abroad, at 7.7 percent, according to the U.S. Census Bureau.

No single nationality dominated among foreign buyers in Manhattan, according to DataQuick’s analysis. Of the top three countries of origin, Italians made up 11.3 percent of foreign buyers; Israelis, 10.7 percent; and Chinese, including those from Hong Kong, 8.7 percent.

"New York" and "Manhattan" were among the most-searched terms for this market area by foreign site visitors on Juwai.com, Realtor.com, Trulia and LuxuryPortfolio.com.

Buyers listing non-U.S. home addresses accounted for 4.4 percent of existing-condo sales and 4.2 percent of existing single-family home sales in the time period examined by DataQuick.

While no median sales price data was available for Manhattan’s existing single-family homes, condos and co-ops sold for a median $740,000 in the last three months of 2011, down 9 percent year over year, according to the Real Estate Board of New York (REBNY).

That’s by far the highest median sale price for condos among the 10 markets, with Honolulu a distant second at $291,100.

While Manhattan’s real estate is considered among the most expensive in the country, "compared to Paris or London we are much cheaper," said Richard Steinberg, senior managing director of Warburg Realty Partnership in Manhattan.

"Manhattan is the financial capital of the world and most (non-U.S.) buyers want a hard asset outside of their country," Steinberg said.

Jacky Teplitzky, managing director at Prudential Douglas Elliman, said she has worked with 20 international clients in the past year. Most hear about her from private wealth managers or word of mouth.

Foreign buyers tend to have more faith in the U.S. economy than locals do, she said.

"(Foreign buyers) look at the U.S. as a safe haven. Manhattan is the center of finance, law and business so they want to own a piece of the Big Apple … for their own use, as they love to shop here, go to (the) theater, opera, ballet, Central Park, go to the restaurants. They love the diversity of the city and its people," she said.

"From an investment point of view, the appreciation that real estate (has) had historically in the city has been good and it is easy to find tenants if they want to rent the property."

More than half of Steinberg’s business consists of foreign buyers, he said. They tend to be self-employed entrepreneurs and buy investment properties to rent out.

He has participated in "road shows" to countries such as China, India and Europe to bring properties in new buildings to the attention of buyers who buy sight unseen.

"We go over for five days and with a local co-partner rent a conference room for the weekend. They provide the buyer, we provide the product (we form strategic alliances with developers of new buildings). (We) sit at tables with all collateral material — offering plans, floor plans, contracts, (comparables), etc. — previously transcribed into their language," Steinberg said.

"We took 20 reservations on our last trip to Shanghai, have signed five, and are still negotiating the rest."

New York County had an extremely low share of sales that were in some stage of foreclosure in the fourth quarter, at 1.2 percent, and only 1 in 4,207 units had received a foreclosure filing that same quarter.

In 2010, the county’s vacancy rate was 14.3 percent — just above the national level and the second-lowest among the 10 markets.

Teplitzky said her buyers typically buy nondistressed condos and townhouses.

"They ask about foreclosures and short sales, but when they realize how difficult the process is they back out of it," she said.

Foreign buyers want "no hassle" deals, Steinberg said.

"We have to provide bankers, lawyers and management companies to handle all of their needs. They want good deals in trouble-free buildings — litigation is an absolute deal-killer, even if it is small," he said.

In addition to having a team in place to assist foreign buyers, agents also need to spend considerably more time educating their clients on the process of buying real estate in the U.S., Teplitzky said.

"It is a very interesting part of the business, but not because you speak their language (does that qualify you) to work with them. They need hand-holding, attention, explanation to the very minute detail. They rely on you for everything," she said.

For access to the full report, see: "10 Hot Spots for Global Homebuyers."