Overseas agents woo Chinese buyers

Estate agents from London and New York are beating a well-worn path to wealthy buyers on the mainland and Hong Kong to sell upmarket flats on their books. In London, buyers from Hong Kong and the mainland led a GBP22 million (HK$282.6 million) Asian buying spree at luxury block NEO Bankside released for sale just last month. And in New York, developers of luxury condominium project One York have pinned their hopes on a wealthy Chinese buyer taking ownership of the building's US$34 million penthouse, while agents selling apartments in Manhattan House on the city's Upper East Side are planning a roadshow to key cities on the mainland to help shift their allocations. 'We have seen significant interest from Chinese foreign nationals,' said Brian Fallon, a partner of O'Connor Capital Partners, the owner and developer of Manhattan House. 'As a result of this continued interest, which we expect to continue throughout 2010, our team is planning to visit a few major cities in China this coming spring to present real estate opportunities at Manhattan House.' With mainland buyers developing a reputation for paying cash for New York condominiums in the US$2 million price range, developers of One York at the intersection of 6th and Canal Streets had a wealthy Chinese buyer in mind for the penthouse crown jewel in the new 44-unit condominium building. 'We've seen a lot of interest from buyers in Shanghai and Beijing,' said Stanley Perelman, the managing director of Jani Real Estate, the developer of One York. This prompted Perelman to send his director of sales to Shanghai to meet potential buyers and he has hosted visits to the property from a number of them. Similar scenes are being played out in other high-end residential properties across the city and brokers and lawyers familiar with the trend say that it has been largely sparked by lower prices combined with a soaring Chinese economy and a flight towards hard assets and away from a depreciating US dollar. Homes in Manhattan are about 20 per cent cheaper than they were two years ago and the dollar's fall has added to the appeal of lower-priced properties. Trump Tower, according to insiders, is a sought-after address for wealthy Chinese. 'The Chinese have emerged as a new frontier in the New York market,' said Kristin Hitsous, an associate lawyer at real estate law firm Rosabianca & Associates. In addition, said Hitsous, mainland buyers see New York as a place to educate their children and invest in rental condominium properties. 'The Chinese view New York as a financial harbour,' she said. 'A long-term investment that offers tantalising profit opportunities.' According to Perelman, mainland buyers are also in a position to pay cash for their multimillion-dollar homes, forgoing the need for complicated international financing. Hitsous agreed. 'With banks tightening their belts and increasing their restrictions on available credit offered to even US citizens, it is much more difficult for a foreign national to obtain a loan from a US bank.' On top of those issues, there is also the matter of managing a loan procured and serviced in a different country. 'Issues and problems have arisen with respect to real estate tax escrows, delays in the application of real estate tax abatements and overall customer service,' she said. 'If a buyer is able to obtain financing overseas, for all intents and purposes, these deals are still viewed as 'cash deals' because the money is wired to a New York bank prior to closing,' Hitsous said. Fallon agreed that Chinese buyers were sophisticated enough to monitor pricing trends with their local advisers before going to contract. 'However, in today's market, we have not seen price resistance from high net worth, qualified foreign buyers. With the decreased value of the dollar, many foreign nationals realise that now is the time to capitalise on Manhattan real estate,' he said. Companies on the mainland - Shanghai and Beijing specifically - have been known to arrange group visits to hunt for properties. Similarly, the marketers of new or revamped condominiums head to China to woo buyers. 'I recently went on a marketing trip to China, spending a week in Beijing and Shanghai,' said James Cox, the exclusive broker for One York. 'What I found is that there is a great deal of interest in buying New York City real estate, but a limited knowledge base on how one would go about handling such a transaction. The Chinese buyers described a need for help in the process from start to finish.' Cox said One York proved especially tempting because of its proximity to Chinatown, an address in a zip code listed by Forbes as the 12th wealthiest in America, an outdoor pool, a gymnasium manned by a private trainer, and its high-technology features. The building's garage is a Swiss-engineered design. Owners drive their car into a designated spot, swipe a card, get out, and then allow their vehicle to be mechanically deposited in its spot.