The Real Deal New York

Indian buyers jump onto the NYC real estate bandwagon

They view Manhattan as a solid investment opportunity, panelists say at TRD showcase

May 13, 2016 08:00AM
By E.B. Solomont

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From left: Elizabeth Ann Stribling-Kivlan, Emily Beare, Robert Reffkin, Raphael De Niro, Gang Hu and Stuart Elliott

The Chinese may get all the attention, but a new entrant with a big appetite for New York City real estate has emerged: the Indian buyer.

Buyers from India and Singapore — countries with a growing middle class — see New York as a solid investment opportunity, said Elizabeth Ann Stribling-Kivlan, president of Stribling & Associates, speaking at The Real Deal’s New York Real Estate Showcase and Forum Thursday. “They see it as a really good place to park their money.”

Nationwide, Indian buyers spent $7.9 billion on U.S. real estate during the 12 months ended March 2015, up from $5.8 billion a year prior, according to the National Association of Realtors. But until recently, their penchant for New York real estate has faced barriers compared to other foreign buyers.

In September, TRD examined the roadblocks that have kept Indian investors at bay until now, including the country’s widespread poverty and a smaller number of high net-worth individuals than some smaller but wealthier countries, such as Japan and Germany. The Indian government also restricts how much individuals can invest abroad to $250,000 per year, and for some wealthy buyers, London is more of a draw than the Big Apple.

New York “makes sense” for Indian investors who speak English but are priced out of the overheated London market, where they may not find properties between $1 million and $3 million, said Elliman’s Raphael De Niro, one of the panelists.

Beyond India, panelists — which also included Emily Beare of CORE and Gang Hu of Greenland — said investors from the Middle East, Russia and Brazil continue to buy in New York. “I’m glad I wasn’t in Brazil these last two weeks, but there’s still a lot of money there,” Stribling-Kivlan told the audience. “When their government changed, what a great opportunity to take their money out and park it here.”

And despite headwinds in their own economy, Chinese buyers remain very much in play for Manhattan properties.

“You may see a different economy in China, but the Chinese are still buying here,” said Stribling-Kivlan.

With regard to China, Compass CEO Robert Reffkin said the faltering Chinese economy has produced higher demand among Chinese for U.S. assets – not just from individual investors but also on a corporate level.

Panelists at Thursday’s showcase, which was moderated by The Real Deal‘s editor-in-chief Stuart Elliott, differed on how to best tap into foreign buyer pools. Reffkin, who criticized firms’ affiliations with auction houses and international brokerages, said Compass targeted the top brokerages in select cities and has worked to build personal relationships.

But Stribling-Kivlan, whose firm has a formal affiliation agreement with Savills, said partnerships like her company’s can also work. “It can’t just be window dressing,” she said. “You actually have to put something into it. It’s not going to happen overnight.”

Similarly, De Niro said Elliman’s affiliation with Knight Frank has helped him secure listings. “Sellers are hung up on the unicorn, foreign buyer. If you don’t have international affiliations, it’s tough,” he said.

But it’s what wasn’t said at the panel that drew the most attention.

Panelists passed on a question about how they’d handle a $75 million listing in a Trump building.

The group also said the U.S. presidential election may be interesting, but it’s not a concern for foreign clients. “[New York] is almost a global city unto itself like London or Hong Kong,” said Stribling-Kivlan. “Prices won’t go up tremendously or drop. New York is still a megalopolis with a finite amount that can be built.”

New construction – in Midtown, in particular – continues to be a draw for foreigners since condos are far easier to purchase than co-ops, speakers said.

Even the U.S. Treasury’s recent crackdown on anonymous buyers who purchase through LLCs hasn’t been much of a setback. “The main concern I’ve heard is they’re nervous about getting onto the IRS’ radar because they’re only staying here for a few weeks a year,” De Niro said. “They don’t want to be taxed.”

Earlier panels at the event focused on the state of the residential and commercial markets in New York City.

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