As the value of real estate in New York City has soared - and for the most part been seemingly immune to market trends that have tanked other markets - buying apartments has become a legitimate form of investment for those with the means. New York real estate has traditionally been seen as a safe haven for wealth, and in particular as a hedge against political and economic risk endemic in much of the world. Indeed, for many years now foreign buyers have been an important component of the market for condos and to a lesser extent, co-ops - particularly the luxury segment of the market.
The pandemic changed that - at least for the short term. With the implementation of restrictions on travel (and premature proclamations about the demise of New York City), foreign sales of condo and co-op units dropped precipitously in 2020. That trend has clearly reversed. “The pandemic had a huge effect on foreign buyers,” says Matthew Mackay, an associate broker with Douglas Elliman in New York. “We didn’t see many sales to foreign buyers for most of 2020. In the second half of 2020 we saw domestic buyers return. In 2021, we have seen the return of foreign buyers in the luxury market.”
Nicole Beauchamp, a broker with Engel & Volkers in New York, adds that, “In November 2021, Europeans can come to the U.S. with proof of vaccination. Their return will bring new energy to the market which has been doing well, otherwise. During the pandemic, international buyers would buy sight unseen. Transactions were conducted through Zoom calls, etc. Not everyone was comfortable with this.” She notes that, “The return of the foreign buyer is important for re-sales, even more than new developments.”
Where Are Buyers Coming From?
Mackay reports that “Foreign buyers are coming back from many locations, including Dubai and China. An interesting trend among Chinese buyers is that they are looking for large apartments for their adult children living in the states. Presumably the children use it as a primary residence.” He also adds that concerns over anti-Asian discrimination and violence, which were significantly heightened after an uptick in such crimes last year, are less of a factor with this wave of buyers. “It was a problem last year,” Mackay says, “but [buyers] are more comfortable with the new administration.”
In addition to Middle Eastern buyers, Mackay is also seeing significant numbers of buyers from South America - but at this point, he says he hasn’t yet seen a return of European buyers. “Traveling during COVID is still restricted for them, but we expect them back into the market later this year when the rules change in November.”
What Are Foreign Buyers Looking For?
Beauchamp notes that foreign buyers are generally looking for condos with good amenity packages - and tend to shy away from co-ops altogether, due to the level of financial disclosure required by most boards.
“Typically, overseas buyers want doormen, concierge services, a fitness center, and optimally a business center. These types of owners lean on staff to help with things like getting an apartment ready when you return from away. They need reliable cleaning people, sometimes even a property manager, as well as someone to stock the fridge the day before they return. They gravitate to buildings that have multiple services available.”
“Apartment size depends on how often they are here, and with whom,” Beauchamp continues. “Often, they are looking for larger units; three bedrooms. Whether or not they entertain, especially for professional reasons, is also a big consideration in choosing the space. It’s case by case.”
In the final analysis, the ‘death notices’ for New York were premature. The market is back, the COVID discount is over, and the foreign buyer is still an important and growing element in the New York residential real estate scene.