The New York City real estate market is seeing an influx of investors from abroad, helping to keep the market going strong. Many of these overseas property buyers have no intention of living on Manhattan, where most of the property is being purchased. Rather, they see it as a good opportunity for rental income and a long term investment that will appreciate.
An article in the New York Times highlights this trend and notes that condominiums are a particular favorite of foreigners. Condos are relatively easy to buy into and, even in the strong Manhattan market, they are still cheaper than properties in some cities such as London. There are a number of high-rise condo buildings under construction and that have recently coming online. Over the past 18 months there have been about 3,000 condos sold in Manhattan, and about 1,000 of those have been to foreign buyers.
Real Estate analysts see several factors at play in the strong demand from foreign buyers. There is a bit of a downtown in other US markets and New York is always a good bet for long term gains. Additionally, the rental market in the city has always been strong, so there is potential for rental income. For those with the money to invest, this makes owning a more attractive prospect than renting.
As an example, one person profiled in the Times, Ana Marie Ruiz from Bogota, Columbia, had trouble finding a place to rent that wasn’t too expensive. She works at the Columbian Government Trade Bureau in the city and needs a place to live, but either couldn’t find a place that would take her with no credit history or that wasn’t priced out of her range. So, with the help of her parents in Columbia, she bought a midtown Manhattan studio. When she heads back to her homeland, her mother intends to rent it out and collect the income.
Co-ops, with their tenant boards, make up about 70% of the ownership market in Manhattan. They also are difficult to buy into, as the board must approve all buyers. This makes the new condominium market more attractive for overseas buyers, as they don’t have to overcome this hurdle. With plenty of new high rises set to open in the next few years, the market should continue to be strong.
