The foreign investors buying trophy New York City properties in record numbers these days are getting a
little help from their own. Foreign real estate developers and brokers are setting up shop here, catering almost exclusively to overseas clients.
Sonu Arora, a 29-year-old developer from Manchester, England, founded the Iconic Development Corporation here about two years ago. Now he’s completing a 44-unit condominium development on the edge of Park Slope at Fourth Avenue and 19th Street in Brooklyn that was funded entirely by close friends and family in
England and Dubai.
Arora’s investors aren’t looking to buy exclusive luxury properties or mass-market, cookie-cutter condominium projects, he said. They want stylish, but affordable; fresh (a word that appears throughout the project’s marketing materials), but not sterile. They also expect a good investment.
“We are not looking at short-term gains, either by selling quickly or flipping contracts,” said Arora, who recently moved his family permanently to New York.
Foreign investors can get nervous after reading or hearing news reports about the troubled U.S. stock and real estate markets, Arora said. New York’s high real estate taxes and maintenance fees can also scare them away, especially in uncertain times.
“People are getting a little bit more
conservative,” he said.
But Arora said his friends and family across the Atlantic trust his advice because they’re making a 20 to 30 percent return on their investments. And to reassure them that their investments are solid, he flies them here, along with bankers from London and Dubai, and shows them what the city’s real estate market really looks like.
“It gives them perspective in a market somewhat troubled by differing market
reports,” Arora said.
His condos went on the market in February, six months ahead of schedule, for about $600 a square foot, he said. Prices start at around $400,000 per unit. After they’re sold, with marketing help from the Developers Group, his investors should be very happy with their return, Arora said.
They had originally expected the condos to sell at around $500 a square foot, he said. “That’s what builds momentum,” he added. “They get more confident as you work with them, and they’ve seen a decent return on their investment.”
Arora’s company is starting the process of converting a former glass factory at 35th Street and Third Avenue in Manhattan into 12 boutique condos. Arora is also planning another condominium project along the waterfront in Staten Island that should be completed next winter, and he’s bought a condominium site in Sunset Park, Brooklyn.
“Overseas investors have always had an eye on New York,” Arora said.
Rodrigo Niño, by contrast, doesn’t develop properties. But the 38-year-old Colombian native does help wealthy foreigners buy luxury condominiums here through Prodigy, his third-party real estate sales firm. He said he’s currently in the process of opening a branch office in Soho, and recently moved his family from Miami to an apartment in the West Village.
Niño’s company currently has two offices in Miami, one in Panama and one in Madrid. His company relies on real estate brokers who live in smaller cities overseas, such as Pamplona, Spain, near the French border. Those brokers can find buyers who have the euros and the desire to invest in New York City, but lack the experience and connections. The brokers tell Niño what their clients want, and he finds it.
“We have to rely on the brokers’ expertise,” Niño said. “They know their niche markets.”
Finding the right properties isn’t easy, Niño added. His wealthy clients want the best, and they have the money, sometimes as much as $30 million, to buy it. They prefer investing in condo/hotel projects that offer a full array of high-end amenities and have name brands they recognize. They want to live in condos along Park Avenue, or in Soho or Tribeca.
He’s helped several investors buy condos in Trump Soho and the William Beaver House on Wall Street, he said. His goal is to sell between $750 million to $1 billion worth of property in Manhattan over the next year, and he’s convinced he can do it.
“The reaction has been very, very surprising to me,” Niño said. “Everybody wants in. No one questions the validity of buying in New York.”
Amir Yerushalmi, president of Vision Real Estate Group, has been helping fellow Israelis buy property in New York City for the last 10 years. He started out buying individual condos for his customers in Israel. When they rent out the apartments, he collects the rent, deposits the money in a bank account and gives them quarterly market reports. “We try to give them a better feel of the market from people who sit right here,” he said.
But the makeup of his customer base has changed in the last two years. Now, most of his customers are from Spain, the United Kingdom or India.
New York real estate has become too pricey for many Israelis, especially when maintenance fees and taxes are added in, Yerushalmi said. They were willing to pay $600 a square foot, but not $1,000 a square foot. So they’re investing more in places such as Jersey City.
“Europeans, they buy for two reasons: The dollar is cheap, and they love Manhattan,” he said. “Israelis look at the return, and if they see negative cash flow, then they aren’t going to buy.”
He said he’s now spending more time and energy on large condominium development projects financed primarily by investors from France, India and the U.K., as well as Israel. In August, a group of international investors put in about $3 million toward the purchase of a 107-unit apartment complex in Jersey City that Yerushalmi said he bought below market value and turned into condominiums.
Spanish investors have also put in $5 million toward the purchase of a building at West 148th Street in Harlem, he said.
His company is also representing three Spanish hotel companies that want to buy hotels in Manhattan. They’re aggressive investors, he said, and they have cash to spend. Finding the right properties is hard because the hotel market is so strong, he said, but a few offers have been submitted.
Yerushalmi said he’s just glad he’s in
a good position right now. “It’s going to
be a tough year on the real estate market. And probably, 2009 is not going to be
any easier.”