American buyers unpacking boxes in condos that are finally up after years of construction are likely to hear a variety of overseas accents in the elevators.
That’s because foreign buyers are now moving into hundreds of units in some of the city’s higher-profile luxury condos, brokers say. Those apartments weren’t just piecemeal purchases — the units were often part of bulk buys by foreign investors, who quickly resold the homes to their countrymen.
“The flurry is consistent with robust economic conditions that exist in Europe,” said Jonathan Miller, the president of Miller Samuel, an appraisal company. “The economics make sense.”
As a rule of thumb, buildings that attract bulk buyers tend to be new construction, not excessively luxurious, with units that are modestly sized. (When flipping, buyers and brokers say, it’s easier to divest yourself of a reasonably roomy apartment, which can be furnished without a huge cash outlay, than a cavernous one.)
Price points for these types of units are not at the top of the market; they range from about $1,000 to $1,300 a square foot, according to Patricia Warburg Cliff, a senior vice president and director of European sales for the Corcoran Group. These condos tend to be found in well-established neighborhoods, like Midtown, the Upper West Side or Tribeca, she said.
Some examples?
One is the Ariel, located at 245 West 99th Street, and built by Extell Development. Before sales closed, it attracted sizable numbers of Koreans and Irish investors buying in bulk, brokers say.
Another is the Caledonia, located in West Chelsea at 450 West 17th Street. Sales of studios, one- and two-bedrooms have concluded at the building, developed by the Related Companies.
The 30-story, 258-unit high-rise at 200 Chambers Street, developed by Jack Resnick and Sons, is another example. One foreign buyer here recently picked up 20 units and another bought 10, according to sources close to the sale. A few units are still on the market.
Neither a Caledonia nor 200 Chambers spokesperson would comment on the bulk-buying trend for this article.
But for their part, developers don’t always like the buy-and-unload approach, fearing that high-end buildings, which pride themselves on their exclusivity, will turn into a revolving door of changing residents.
“Developers want people who will call their building home. They don’t want a rental building,” Cliff says. “Renters aren’t as cautious with the sofas or hallways. If you own, it’s in your vested interest to maintain the building.”
As a result, at least one property, the Orion, at 350 West 42nd Street, put a kibosh on the bulk-buying trend, adding a clause to contracts stipulating that buyers can’t resell upon purchase, according to brokers.
Extell, the developer of the building, didn’t return repeated calls for comment.
Rejecting bulk buyers simply because of the country of origin on their passport is illegal; nationality is a protected home-buyer category, as is race or sexual orientation, according to brokers. While bulk purchases have heated up, it isn’t necessarily a new trend.
Four years ago, it was common for Wigder Frota, a senior vice president at Prudential Douglas Elliman, to sell 15 apartments in one building to a single Brazilian investor. Foreign investors are still buying in bulk like that, he said, though his clientele has changed, and is now made up mostly of Italian and British bulk buyers, he says.
Many of them buy under the name of a corporation to protect their privacy, according to Frota.
They also pay cash.
Mortgages are less important since “they don’t get any advantage from income-tax deductions,” he said.
Bulk buying isn’t just limited to foreigners. At the New York residential market’s 2005 pinnacle, an investor from the Midwest bought 25 condos at 150 Nassau Street, an 1895 rusticated-granite landmark near City Hall.
However, the Costco approach to home-buying has in general been perceptibly rarer among U.S. investors, according to Tamir Shemesh, an executive vice president with Prudential Douglas Elliman, who has dozens of foreign clients.
These clients also seem to be more wary of bulk buys these days, as developers both raise their Schedule A offering prices and add resale restrictions, he says.
Instead, some bulk-buyers have shown a can’t-beat-them-so-join-them approach, becoming equity partners with the developer before the first shovel breaks ground.
Among other advantages, it saves buyers burdensome closing costs, which can total 14 percent of the transaction’s value, Shemesh says.
Recently, Shemesh paired a would-be bulk-buyer, who asked to remain anonymous, with Christopher Brokop, whose company, Vesta Development Group, is developing Landmark 17, a red-brick former convent at 233 East 17th Street.
Shemesh recently facilitated a similar introduction to an investor for an as-yet-unannounced condo project at West 86th Street and West End Avenue, he says.
“Foreign investors who say the numbers don’t make sense to buy and flip,” he says, “are now coming at it from the other end, as an equity holder.”