NYC’s global real estate giants
The countries that poured big money into Manhattan commercial real estate in 2015
Like other oil-rich countries, Abu Dhabi’s investment in New York mostly runs through its sovereign wealth fund. Foreign investors spent $1.16 billion here last year. But early last month, Reuters reported that the Abu Dhabi fund may transfer billions from its sovereign wealth fund into the government treasury. The fund’s head of U.S. real estate investment dismissed the suggestion that investment could dry up, but cryptically alluded to “anxiety” within the fund about the state of the market.
With $669.8 million in Manhattan commercial investment, Qatar’s dollar footprint in 2015 seemed relatively small, but the Middle Eastern nation invested in one of the city’s most sizable development projects: Brookfield’s Manhattan West. In October, the Qatar Investment Authority bought a 44 percent stake in the $8.6 billion mixed-use project.
Like Korea, Japan is beset by economic stagnation and record-low interest rates. In January, the country’ s central bank made headlines by moving short-term rates below zero. Compared to that, cap rates in Manhattan are sky high. The country’s foreign investors spent $1.03 billion last year. Real estate company Mitsui Fudosan was the most active of the bunch.
Chinese buyers were the second-biggest commercial investors in NYC last year, spending $8.61 billion. Residential brokers say they’ve become the most active foreign buyers in NYC. While some fear a drop-off in investment, Chinese citizens have been “smurfing” — moving large sums abroad through friends or family to get around the country’s legal transfer limit.
Norway’s $830 billion sovereign wealth fund accounts for virtually all the country’s investment in New York real estate. Last year, it spent $1.95 billion here, including $1.56 billion on a 44 percent stake of Trinity Real Estate’s Hudson Square portfolio. But the head of the fund recently told the WSJ that real estate investment opportunities are not looking rosy: “Property markets are highly priced,” he said.
Four years ago, Brazilians were making headlines for their apartment buying sprees in Manhattan. But today, the South American nation is in deep economic trouble. Along with the Zika virus, the country is being hit hard by falling commodity prices and runaway inflation. Anecdotal evidence suggests they’ve pulled back on NYC investment accordingly.
German firms were among the most active foreign investors in New York commercial real estate earlier in the cycle, but they have lost ground to their Asian and Middle Eastern peers. Last year, they spent just $580 million in the Manhattan commercial market. German institutions complain about low cap rates and growing competition in Manhattan.
For a country of its size with a lack of oil, a tally of $445.3 million in Manhattan for 2015 is more than respectable. The country’s easily accessible bond market has been a popular source of funds for developers like Extell. The country’s economy grew by 2.3 percent in 2015. Nothing to brag about, but also a far cry from a crisis.
Russian buyers, of course, have garnered attention for a few splashy Manhattan apartment buys, but their impact on the broader market has been limited. Nevertheless, investment from Russia has been on the decline since President Valdimir Putin’s invasion of Crimea triggered foreign sanctions and an economic crisis.
South Korea’s central bank has cut interest rates several times in the past few years amid economic weakness, and yield-hungry investors are increasingly looking abroad — including to New York. Last year, the country’s investors poured $1.11 billion into Manhattan commercial real estate, the biggest buy being insurer Lotte Group’s $805 million acquisition of the Palace Hotel.