NEW YORK (REUTERS) - For the first time, the Chinese have become the biggest foreign buyers of apartments in Manhattan, real estate brokers estimate, taking the mantle from the Russians - whose activity has dropped off since the unrest in Ukraine and the imposition of sanctions against Russia by the United States.
Wealthy Chinese are pouring money into real estate in New York and some other major cities around the world, including London and Sydney, as they seek safe havens for their cash and also establish a base for their children to get an education in the West.
Reuters asked five of the top real estate brokerages for their ranking of foreign buyers in New York City. The Chinese ranked first in both volume and value of sales in all their estimates. Opinions differed on just how the Russians, Europeans and South Americans stacked up next.
There are no official figures collected on the national and ethnic backgrounds of home buyers because of US fair housing laws, designed to protect against discrimination.
The Chinese interest is mainly a valuation play, real estate experts say. After the US housing bust in 2007-2010, home prices in major US cities fell to levels that made them attractive. While US prices have been recovering, they are still appealingly low by comparison with many other parts of the world.
Many Chinese buyers are switching their interest away from markets like Shanghai, Hong Kong and Singapore amid fears that prices have soared to frothy levels in those cities.
Luxury apartments cost between US$4,100 (S$5,150) and US$5,000 per square foot in Hong Kong, while in Manhattan and Sydney they cost half that, ranging from about US$2,100 to US$2,500, according to Knight Frank's Prime International Residential Index. London is also cheaper, at US$3,300 to US$4,100 per square foot.
The brokers say that many Chinese buyers are also investing abroad so they can own property near major educational institutions. Some are buying homes near top colleges - even though their children are so little they can't walk yet.
More than 80 per cent of wealthy Chinese want to send their children overseas to school, according to the Hurun Report, a Shanghai-based publication. "By far and away, the Chinese are the fastest growing demographic," said Dean Jones, a US-based broker with Sotheby's International. "They are the top consumer for real estate, and New York is front and center."
Added Pamela Liebman, CEO of the Corcoran Group, one of the best known New York real estate firms: "In sheer numbers, the Chinese outspend the Russians in every segment of the market."
In Manhattan, it wasn't long ago that Russian oligarchs dominated the gilded world of real estate, gobbling up status-heavy, marquee properties, such as an US$88 million, Robert A.M. Stern-designed penthouse and a US$75 million mansion with a ballroom and a rooftop aerie.
Now, many brokers say, Russian buyers have become scarce largely because of fears that the struggle over Ukraine will worsen leading to increasingly tough US sanctions on politically-connected and wealthy Russians. "They're gone, they're gone," said Sotheby's International broker Nikki Field, "They've been gone since the Crimean outbreak."
The Chinese grew to 28.5 per cent of Field's international business in the first quarter of 2014, up from 19 per cent last year. "We've only scratched the surface with Chinese demand," Field said.