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Wealthy Foreigners Trade London Homes For New York

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4:00PM BST 01 Jul 2014

For the city that never sleeps, the Manhattan skyline has been twinkling a little less brightly in recent years.

Walk down one of the famous avenues on most weeks of the year, through Midtown, the Upper East Side or even the Financial District, and it soon becomes apparent that many of the towering luxury apartment buildings which line both sides of the street are virtually in darkness.

The reason for the dimmed windows is a growing phenomena; in New York’s luxury condos and co-ops, for much of the year there is literally no one home.

Manhattan’s real estate market has become the latest destination for wealthy foreigners keen to park their wealth, a safe haven in an uncertain world where no one asks questions and discretion is assured.

Demand for exclusive and expensive properties where questionable funds can be given a legitimate coat of paint is so high that dozens of new skyscrapers are being thrown up around the city to meet it.

In many cases, buyers from places such as Russia, China or Argentina, where even the super-wealthy fear the whims of an undemocratic government or uncertain currency, have been snapping up apartments with such hunger that they often don’t bother going for a viewing, making the purchase via a phone call with a specialist broker, let alone live in their new property.

Once bought, the flats sit vacant, accruing value and providing a security blanket for the owner in the event that the political or economic climate gets a little sticky in Moscow or Bogota or Lagos.

Latest Census Bureau statistics show that from 49th to 70th street between Park and 5th Avenues, a stretch of prime Manhattan real estate running from Midtown to the Upper East Side including a stretch overlooking Central Park, 30 per cent of properties were vacant for at least 10 months of the year.

Their owners reside thousands of miles away in the countries where a lax regime might have allowed them to accrue a fortune but not necessarily hang on to it, leaving empty a Manhattan pied a terre most New Yorkers could only dream of owning.

The practice of, if not laundering then certainly recycling, foreign money through a stable, major first world city via the property market is not new.

With its housing market seemingly immune to the fluctuations which bedevil the rest of the country and much of the rest of the world, London has long been the arena of choice for global billionaires with a suitcase of cash or two looking to invest in bricks and mortar.

However, according to the Knight Frank Global Cities Survey, New York last year moved into second place behind London as the most important city in the world to the super-wealthy, ahead of Geneva, Dubai and Paris.

Knight Frank predicted that the Big Apple would go on to overtake London within a decade.

An article in this week’s New York Magazine suggested that one of the reasons for the shift from London to New York was the more favourable tax regime on the western side of the pond, with those buying into new builds receiving tax breaks while in the UK, penalties have been imposed on foreign “non-doms” in recent years.

Britain also requires lawyers acting on behalf of buyers to report any suspected illegality to the authorities – a nicety US attorneys are specifically exempted from under the terms of the 2001 USA Patriot Act, which regulates financial institutions.

There are far fewer questions asked more generally in the US, where overseas’ investors commonly cloak their identities by buying under the guise of a company or corporation.

For native New Yorkers, who increasingly find themselves losing out in bidding wars to cash buyers from overseas, London is welcome to these foreigners in search of a property safety net.

Long since resigned to living in tiny shoe boxes until they begin to have children, when they tend to move to Brooklyn or Long Island, young Manhattanites are now struggling to get their foot on even the lowest rung of the ladder.

Billionaires are paying nosebleed prices for the very highest of the high end properties.

New York's most expensive apartment, a condo in the apartment building 15 Central Park West, was sold in 2012 for $88 million (£51m) to a company linked to Ekaterina Rybolovleva, daughter of Russian billionaire Dmitriy Rybolovleva.

The trend was begun by Mexican financier David Martinez, who a decade ago shattered records by purchasing an apartment at the Time Warner Centre in Columbus Circle for $42.5 million.

The most expensive apartments in the building now cost as much as $65 million (£38 million).

Both are likely to soon be beaten by an apartment complex currently under construction at 432 Park Avenue, where a penthouse has an asking price of $95 million (£55 million) - $11,000 (£6,415) a square foot.

This is still some way short of London's record property sale, the £140m paid for One Hyde Park's penthouse in 2010.

Top Eight Manhattan apartment buildings for sale by 2014 square foot price

1) Upper West Side – 15 Central Park West – $6,402 and $6.95-$65 mill

2) Columbus Circle – Time Warner Centre $4,689 and $6.5-$68 mill

3) Columbus Circle – Residences at Mandarin Oriental $4,073 and $6.5-$50 mill

4) Upper East Side – 515 Park Avenue $3,818 and $6.75 – $19.9 mil

5) Upper West Side – Millennium Tower $3,640 and $17.95 mill

6) Flatiron District – One Madison $3,609 and $37.5 mill

7) NoHo – 40 Bond St $3,598 and $4.1-$8.3 mill

8) West Chelsea – Sky Garage, 200 Eleventh Ave $3,565 and $9-$23 mill

But more modest $1 million and $2 million flats are now being sold to foreigners with a few millions who want somewhere safe to put their money.

These type of properties, which tend to be cheap compared to their equivalents in Hong Kong, and especially London, were until recently just about affordable to native New Yorkers on a decent salary, who are now find themselves priced out.

Michael Stern, a New York developer, told New York Magazine: “The global elite “is basically looking for a safe-deposit box.”

According to the Congressional Research Service, foreign investment in real estate across the US amounted to $50 billion (£29 billion) in 2012, with New York the biggest market.

One recent estimate suggested that 40 per cent of condos – where the building is owned jointly by owners – and half of newbuilds were foreign owned.

While Russians once represented the biggest market, anecdotally, estate agents report that, particularly since the Ukraine crisis, they have recently been overtaken by the Chinese.

It is illegal in New York to ask buyers their nationality, a measure designed to prevent racism in the housing market, but a survey in April by Reuters found that all five of the biggest real estate firms in the city reported that the Chinese had the biggest share of their market.

Dean Jones, who works for Sotheby’s, said: “By far and away, the Chinese are the fastest growing demographic.

"They are the top consumer for real estate, and New York is front and centre."

Brazilians, Argentines and other South and Central Americans are also attracted to New York, being closer than London and with a far more stable economy and currency than their own.

Another key fact from the Knight Frank Wealth Report is the prediction that the numbers of very wealthy individuals will increase by 30 per cent by 2024.

That means the demand for property in both London and its New York rival from foreign buyers with a spare million or ten to spare isn’t going to slow any time soon.

Top five most expensive neighbourhoods in London, second quarter 2014, by sq ft according to Savills:

Knightsbridge: £2,490

Belgravia: £2,370

Mayfair: £2,320

Chelsea: £2,100

Kensington / Holland Park £2,030

Top five most expensive neighbourhoods in New York, January 2014, by sq ft, according to Bloomberg:

Flatiron District: $1,818 (£1,061)

SoHo $1,669 (£974)

Greenwich Village $1,598 (£932)

Midtown $1,390 (£811)

Upper East Side $1,364 (£796)

Edited by fru-gal

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The semi-literate MSM really annoys me.

ED: Formatting.

Beat me to that one. Singular : phenomenon. Plural : phenomena. MSM Retards : " can't go rong wif briks 'n' morta" . Aaaargh. :(

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Wealthy foreigners have probably just figured out that London is more akin to Syria/Iraq in the next 50 years than some haven of sanctuary from the madness.

Londonistan and all that.

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I was kinda thinking the opposite would happen now they have that ultra leftist blasio mayor in NYC...given the devolved powers cities in the US had. Theyre certainly partial to high property taxes in the US (double thousand figure dollar annual bills for a nice place in Chicago comes to mind)

Or maybe he's just another 21st century leftist..ie talks alot about poverty, hands out some credits to those at the very bottom, screws the middle, and overlooks the super rich.

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Or maybe he's just another 21st century leftist..ie talks alot about poverty, hands out some credits to those at the very bottom, screws the middle, and overlooks the super rich.

This, definitely.

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The semi-literate MSM really annoys me.

ED: Formatting.

If you mean the 'mainstream media', shouldn't that be 'annoy'?

Sorry, couldn't help myself.

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If you mean the 'mainstream media', shouldn't that be 'annoy'?

Sorry, couldn't help myself.

:lol: I just knew, at the time, that I'd also type something stupid. Then again, I don't have a sub-editor!

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