In China, the United States is known as “Mei Guo” the Beautiful Country. In the last two years, mainland Chinese buyers have decided that New York is the Beautiful Market, and have been snapping up properties at the same rapid rate their own country s economy has blossomed.
While European and Japanese buyers interest in New York apartments can be easily attributed to the weakness of the dollar — down 13 percent against the yen and 16 percent against the Euro over the past two years — increasing numbers of Chinese nationals are snapping up high-end properties in Manhattan for different reasons. The Chinese currency, the renminbi, has long been pegged to the dollar by the Bank of China, and its citizens have seen no gains as a result. But in a developing economy still vulnerable to state planning and under heavy U.S pressure to devalue its currency, New York is a safe financial harbor that offers tantalizing prospects for profit.
Dolly Lenz, a top broker with Douglas Elliman, believes Chinese buyers are a growing group of wealthy purchasers looking for solid investments more than second homes. “They are often newly wealthy and flush with cash I don t know if they have intention to move,” said Lenz. “I started seeing this about a year ago.”
While it is difficult to pinpoint how many of its citizens have been touched by China s new wealth, what is clear is that the last decade has heralded an ascendant business class with a keen eye to foreign trade and investment. The growth of the gross national product has been consistently high over the last decade, with the state setting sometimes unspoken but no less real minimum targets of eight percent.
Chinese investors want to rent out their properties, and have gravitated toward very specific types of investments.
“They mainly go for condominiums and they don t go for co-ops,” said Yi Chen of Sumitomo Real Estate Sales. “They can rent the property and make that revenue.” They also prefer to avoid the belabored negotiations and unfamiliar and unwelcome disclosures required for co-op purchases.
Chinese buyers seek New York neighborhoods with long-established value. Chen said she sees prospective buyers looking primarily in Midtown, with an interest in being situated close to Central Park. Christina Liu of Cohen Smith Chang added that she has also shown Chinese buyers properties in Battery Park and Murray Hill. But trendier neighborhoods that have piqued local buyers interests in the last few years, such as the far West Village and Nolita, have not received the same interest from Chinese investors.
For buyers unfamiliar with the market, brand names count. “They prefer places like Trump Tower and Central Park West,” said Lenz. “They love a name like Trump. If Trump did a building downtown, they d go there as well.” The name signifies a known quantity, and offers some comfort to investors, she said.
Not all brokers have seen the same pickup in Chinese purchases. Barbara Fox of Fox Residential Group said she has seen continued residential interest from Japanese buyers, but no noticeable increase from Chinese nationals. Interest in New York residential properties from all over Asia has been especially high in recent years, said Liu, with its increasing appeal as a long-term investment.
Recent developments indicate that business relations between China and New York City are strengthening, with the prospect of more Chinese businessmen relocating to the city. Deputy Mayor Daniel Doctoroff and Andrew Alper, president of the city s Economic Development Corporation, traveled to Beijing in April 2004 to appeal to potential Chinese investors. In recent years, the Chinese government has made a huge turnaround in policy, encouraging businesses to invest abroad, and clarifying many gray areas about private ownership of businesses. Chinese businesses that recently opened New York offices include Zumart, Sinopec, and China International Trust and Investment Corporation.
“We think the relationship with Chinese companies is a great opportunity for New York in terms of creating jobs here, as well as helping New York companies to provide their goods and services to China,” said Kathryn Wylde, president of the Partnership for New York City. “When a Chinese company opens a branch here, they bring employees from China to get started, but soon they also begin hiring from the Chinese-American community.”
Though the direct link between U.S.-China trade and real estate remains somewhat unclear, apartment purchases are more likely the result of Chinese buyer s domestic success in a rough and tumble transitional economy, brokers say. Additionally, New York s desirability reflects an increased Chinese confidence in America.
“I think it s totally unrelated to the trade relations between the U.S. and China,” said Lenz. “It s individual Chinese buyers betting on the future of the United States, which I think says a lot.”