The New York-Korea circuit is becoming a habit for Corcoran Group executives.
Top brass at the brokerage have recently been bringing a piece of the Big Apple to South Korea, where investors newly freed from currency restriction are eager to invest in Manhattan real estate. Corcoran representatives made three trips to Seoul last year and expect to continue their trans-Pacific pitches as long as there is interest from Korean investors.
“We have a network of people selling U.S. property to South Korean buyers,” says Neal Sroka, senior vice president at the Corcoran Group.
The South Korean government in May lifted currency controls, freeing up money for investment and sparking renewed interest in New York real estate among Korean investors. Investors are now allowed to take up to $1 million out of the country to invest in real estate, but that will increase to $3 million in January, and by 2008 or 2009 the limit might be abolished altogether.
New York real estate is already reaping the benefits of these changes. “As the amount of money buyers are able to bring out of Korea increases, investment in New York real estate increases at the same rate,” says Sroka.
Brokerages like Corcoran have stepped forward to help Korean buyers become educated about the New York City market. “We’ve eliminated intermediaries and embraced the Korean brokerage community,” says Sroka. “We run information sessions, and we’ve retained several local lawyers to help in the process, translating a lot of our collateral material in Korean, giving them complete understanding of the market, what’s around, and why we think it’s a good investment.”
Century 21 New York Metro, meanwhile, works closely with a Century 21 franchise in South Korea and one of its agents there, Steve Kim, to bring clients to New York.
“Steve will give us the client’s details and pull together what the client is looking for — usually it’s residential — and then he shows the clients the information that we’ve been able to find. Then we try to get our agents to speak to them and arrange a visit,” says Michael Simon, president and CEO of Century 21 New York Metro, which is based in Manhattan.
Simon said he currently employs four full-time Korean-speaking agents who handle calls from overseas.
Sometimes the buying process is a long one — up to six months — and occasionally the apartment a buyer was interested in is gone by that point. Still, as most buyers learn, “inventory is not a problem with all of the new buildings going up” in Manhattan, says Simon.
Also, Sroka notes that most South Korean buyers are not looking for quick turnover with their U.S. property: “The Korean buyer is less interested in the return on investment in the short term; they’re more interested in the long-term hold and not as interested in flipping their apartments.”
Korean buyers also have confidence in the New York market. “They believe that the U.S. dollar is stable, the New York real estate economy is strong, and they’re not hesitant about investing,” says Sroka.
Young S. Park, principal broker for New Star Realty and Management in Manhattan, says that many of his Korean clients who have already visited the city tell him they don’t feel the need to see property firsthand when something comes up for sale, because “they know it’s a good investment.”
Apartments in new buildings appeal to Korean buyers, who are willing to pay a premium for them: “$3, $4 and $5 million is the crazy price range we’re seeing come in here,” Simon notes. “They want a piece of New York; the glitz and the glamour. We just did a $3.3 million deal at the Rushmore at 64th and Riverside, and we have another pending at one of the Trump buildings.”
It’s not just the glitz that’s drawing Korean buyers to New York, but also the resurgent strength of the won (Korea’s currency) to the dollar. The currency now trades at about 940 to the dollar, a huge gain from the late 1990s, when the currency experienced a wrenching devaluation in the wake of the 1997 Asian financial crisis.
“The won has increased in value against the dollar, so South Korean investors can invest around the world, but the euro is expensive, so the U.S. is the best. More than 50 percent of South Korean buyers [looking internationally] are looking to invest here,” says Simon, “and they come from a big range of backgrounds — doctors, lawyers, industrialists and parents buying for children.”
According to Park, there are three types of South Korean investors looking to put their money in U.S. properties: those who are thinking about residences for their children who are attending U.S. schools or working here; those looking for small-scale investment properties, such as an apartment they can rent out or a walk-up residential building; and those who are looking for a larger-scale investment, such as a resort facility.
Most of the clients Park sees are looking for residences, often on the Upper West Side.
“I think that more than 50 percent of those buyers have an adult kid either starting school or working in New York and who cannot afford to buy a condo apartment.”
Park’s theory about why many Korean buyers look on the West Side is subway-centric: Most of their children are attending schools such as Columbia, FIT, NYU and Juilliard, which are easily accessible to the West Side subway lines.
Park’s company, New Star, which was started in Los Angeles in 1988, is the only Korean-American owned and operated brokerage in the U.S., he says, and it currently has about 50 franchise offices throughout the U.S. The New York office where Park works was opened in March 2005, partly in response to the rising numbers of South Korean buyers interested in property in New York, and it is filling a need.
“We’ve had many more clients in 2006,” Park says. “The number of people who are inquiring has increased substantially because Korean-American brokerage companies have spent some time in Seoul to promote their services. Many people in Korea who have an interest in buying are very informed.”