Friday, November 11, 2011

Reasons for investing in New York property

New York is now the #1 ranked destination for global property investment.  Currently Chinese investors are a driver but depending on time period, New York has always had strong demand from foreign property investors.  As a broker interacting with foreign investors on a weekly basis, here are key reasons as to why wealthy individuals globally are investing in New York.

New York, specifically Manhattan, is a global brand.  Owning property in the world's financial capital is an ego and image booster.  New York is one of the top must-see destinations for new millionaires from BRIC countries such as China ad  Brazil.  It's the place to be and better yet, to own.

London has traditionally been the top destination for wealthy individuals.  However, prices in London are double compared to New York.  This is partly due to tax policies that are favorable to foreign investors which resulted in foreigners buying up to 50% of properties that are at higher price points.   Having such a high mix of foreign investors create volatility and over reliance in the London market.

Manhattan, New York may be the most expensive market within the U.S.  Globally, Manhattan is actually cheap.  At $1500 per square foot, Manhattan is ranked a lowly 10th according to a report by Citi Private Bank and Knight Frank.  Monaco was the most expensive at $4300 per sqft, followed by London at $3600. Even Hong Kong, ranked 4th at $2000 per sqft is more expensive than Manhattan.  Other cities that are more expensive than Manhattan include Tokyo, Paris, Geneva and Rome.

Despite being ranked a lowly 10th place in price, the same Knight Frank report ranks New York #1 globally for property investment based on factors including economic environment, political power, knowledge and quality of life.

Another reason is U.S. higher education.  The U.S. may have lower math and science scores at the primary and secondary levels.  But a U.S. degree from an Ivy League or top university is still the gold standard.  Many wealthy foreign investors send their children to prep school in the US with intentions of proceeding to an Ivy League university.  Having property in New York is similar to establishing presence in the US in preparation for when the child eventually comes over.

The downsides of investing in New York property?  I always tell foreign investors, especially ones from Asia, that New York property prices appreciate in a slow and steady trend.  They will not see their property appreciate by 30% year like in Hong Kong or Shanghai.  But they will not see 30% declines either.  With leverage, the stable return from New York property magnifies and almost always provide better ROI than stocks.

Wei Min Tan is Managing Director of Castle Avenue Partners and focuses on high net worth clients interested in buying luxury residential property in Manhattan, New York.  He has appeared on CNN, New York Times and the Wall Street Journal commenting on foreign buyer trends in New York property.  Weimin speaks Cantonese Chinese, Malaysian, Hokkien Chinese and conversational Mandarin Chinese.  He can be reached at

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