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Big Apple tempts Chinese buyers

By ARIEL TUNG (China Daily)

07:59, October 08, 2012

It used to be that Chinese buyers who purchased property in New York did so because the city’s durable real estate market was both a reliable and potentially lucrative investment.

Now, however, affluent Chinese buyers are more likely to seek out Big Apple properties as a way to hang on to their wealth, according to real estate brokers.

Wealth preservation is a factor and "they take a long-range view’’, said Kevin Brown of Sotheby’s International Realty.

Brown and partner Nikki Field decided to focus on China when the US real estate market softened in the wake of the financial crisis in 2008. They visit the Chinese mainland a few times each year to host events and meet potential buyers referred to them by HSBC, Citibank and Singapore banks.

One of their first Chinese clients, a mainland woman who now lives in Hong Kong, bought a $6.5 million apartment at One57, a midtown Manhattan tower that, at 90 stories, will be the city’s tallest residential building upon completion.

"She wasn't concerned about the rate of return," Brown said. "She told us she wants her daughter to attend Columbia University and she would like an apartment in midtown Manhattan.

"When we talked about her daughter afterward, I realized she is only 2 years old."

According to the National Association of Realtors, China-based clients are now the second-biggest group of foreign buyers of US residential real estate, eclipsed only by Canadians. In 2011, Chinese buyers accounted for 9 percent of international sales of US homes, up from 5 percent in 2007.

There are nearly 1 million mainland Chinese with a personal wealth of at least 10 million yuan ($1.6 million), according to the Hurun Report, a publisher of magazines for China’s wealthy.

Cash-rich Chinese buyers typically favor new Manhattan buildings such as the One57, near Central Park, as well as "trophy properties" with a history, such as Walker Tower, an art deco highrise in the trendy downtown neighborhood of Chelsea that was converted into luxury condominiums.

Apartments at One57 are priced between $7 million and $64 million, according to Field.

This year alone Brown and Field sold nine properties to Chinese clients in Manhattan, at prices from $3.5 million to $50 million, mostly at One57.

In an attempt to court rich buyers, other New York real estate agents are visiting China regularly or have established links to firms.

Two years ago, the Corcoran Group, one of New York’s biggest residential brokers, began a partnership with two China-based real estate firms. Corcoran also works with several individual agents who represent clients in China.

Corcoran President Pamela Liebman anticipated at the time that about 10 percent of luxury residential purchases in Manhattan would come from the Chinese mainland in the near term.

"In the past we saw real estate deals of $1.5 million to $2.5 million," she said. "Now we see super-rich Chinese making significant purchases of New York real estate valued at $40 million per apartment unit."

Most of Liebman’s higher-end Chinese clients (those who bought properties valued at $40 million or more) have tended not to care about rates of return, which is just one method of valuing a property. She added that she has seen smaller deals made expressly for investment purposes, however.

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