Chinese foreign buyers make up the largest demographic of foreign buyers in Manhattan real estate. Many wealthy Chinese families invest in NYC housing as a hedge for their cash savings and in order to establish a home base for their child’s schooling. With more than 80% of wealthy Chinese sending their children to be educated in the West, these parents understand the personal and financial investment they are placing in the NYC real estate market will have lasting returns for years to come. Manhattan is more affordable and has great potential than many Asian cities like Shanghai, Hong Kong, and Singapore.
Though the advantages and investment opportunities are great for purchasing a home for their children in Manhattan, parents can use the following suggestions to aid them in their purchases:
• Take the time to research and find a great team. You will need a great agent who knows your needs and a great attorney ahead of time who will assist you throughout the purchasing process and will be able to explain the foreign investor laws that may pertain to your purchase. Many real estate agents who work with foreign buyers will already know an attorney who specializes in these laws.
• Know your budget and leave some flexibility in the budget. The 2014 real estate market is a seller’s market due to the improving economy as well as low inventory. Many apartments in high demand will end up in a bidding war. These tend to favor foreign buyers as they are cash strong and sellers want a quick close. However, it is important to understand that this kind of market also garners a premium price.
• Do your research and your homework. Many foreign buyers believe that agents will have a vast quantity of apartments to show once they arrived to New York. This is not so. Due to the lack of inventory, many great apartments do not stay on the market for long. For serious buyers, it is important to do prior research with your agent on your needs and have your financials ready. By the time of your arrival, you may only have days to look and decide. Assuming you’ve found the right team, you can now allow your agent and attorney to alleviate the anxiety and headache of the Manhattan closing process.
• Cash is king but you will not be the only player in town. In the past, most cash buyers had much negotiating power. However, times have changed especially for new developments. Due to the lack of inventory and high demand and many times a tax exemption of 10 years or more, developers do not negotiate at all.
• Know your priorities. Many foreign buyers are drawn only towards new developments, yet most new developments are built in less than central locations. Buyers have to understand what their needs are and take advantage when an opportunity presents itself.