“Every time a seller tells me about this illustrious Russian oligarch that is going to step out of the shadows and buy their $100 million apartment – that is probably worth a lot less — I shudder,“ Leonard Steinberg, a top broker at Douglas Elliman told a room of hundreds of real estate industry professionals at The Real Deal and Luxury Listing‘s NYC New Development Showcase panel on international buyers.
“The truth is that we don’t know the profile of these [foreign buyers], or exactly where they come from, because New York state law prevents us from profiling them,” he added.
In recent years, political turbulence abroad – everything from the Arab Spring to Russia’s renewed ambitions in Eastern Europe – has driven more and more wealthy foreign buyers to places like New York and London, as they hunt for a secure place to stockpile their millions. One example: Ekaterina Rybolovleva’s $88 million purchase at 15 Central Park West.
The panel, which also included Richard Steinberg, executive managing director of Warburg Realty, Stephen Kliegerman, president of Halstead Property Development Marketing and Adam Modlin, president of the Modlin Group, agreed that it is a mistake to image a collective “foreign buyer,” per se, and that every deal involves a unique set of circumstances.
“I think we need to be really clear that there are two distinct foreign buyers: the $1-$4 million buyers, who plan to eventually use the property themselves, and then you have the extremely wealthy buyers, who are buying at One57 or 432 Park,” Modlin explained.
Kliegerman echoed that distinction, explaining that he often sees Asian buyers coming in waves and spending in the low millions, not massive vanity buys.
Elliman’s Steinberg disagreed: “We talk about the $1-$3 million buyer, and they are kind of like the “poor rich” and then we talk about the super rich. But frankly, we are completely ignoring the middle. And the middle is important; the middle is neglected and the middle isn’t sexy. But they are a massive part of the market.”
He went on to say that a foreign buyer from Brazil is in no way the same as a foreign buyer from London, Paris or Beijing. Each country, he said, has its own “personality and cultural characteristics.”
Either way, the Fair Housing Act means that there is no official data documenting how many buyers are foreign, Modlin reemphasized. “Everything we hear, and read about, and discuss is anecdotal,” he said.
Nevertheless, Kliegerman noted that, in China, representatives have shown him lists of tens of thousands of people who want to invest in New York and American real estate in general.
Actually reaching these coveted international clients, said Warburg’s Steinberg, requires a serious commitment to branding.
“People ask me, ‘How do you get to the next level of selling?’” Steinberg said. “The answer is that it’s all about branding yourself. You want someone to get up in the morning and say, ‘Who was that guy I saw in the ad? Let’s call him!’”