International Property Journal - News and information on global property markets

���������

---

Add this page to your favorite Social Bookmarking websites

Investors Fleeing Dubai are Looking
For a Safe Haven in Manhattan

By Patricia W. Cliff
Senior V.P. and International Specialist
Corcoran Group

In the past two months more than two dozen of my new clients in New York City--about 10 to 15 percent of my buyers--have been refugees retreating from failing investments in Dubai. These investors, stung by the recent collapse of the real estate bubble they had enjoyed overseas, are searching to park their money in a secure market that they can trust, often in new developments.

To these buyers, New York City--particularly Manhattan--is an attractive alternative to Dubai. Investors can depend on the quality construction of its buildings and the consistent desirability of its location to lead to good returns.

In the past few years, Dubai’s investors, many of them from the Middle and Far East, bought condos to make quick flip, tax-free profits, so they treated their purchases not as homes but as fungible currency. Quality of construction was a nonissue as they never actually had to close on units. They put down a deposit and waited until the apartments were almost finished and then flipped the contracts, reaping a substantial profit without having to put up the remainder of the purchase price.

But today, as incomplete projects abound and Dubai’s quick money has evaporated, many investors are walking away from their deposits and looking for greener investment pastures abroad. Savvy investors are looking for value and finding it in New York.

Although buying in New York City is more complicated and involves larger closing costs, real estate here suddenly has greater appeal to these individual and corporate investors fleeing from Dubai. Prices are down around 25 percent and the dollar is trading at a big advantage to foreign buyers. Borrowing is also cheap here, although the loan to value ratio that banks demand in order to lend has decreased substantially. The general consensus seems to be that quality real estate in New York City isn't going anywhere but up over the longer term.

These investors are coming to us through a variety of routes, including direct web contacts, and many are purchasing through their bank’s private investment division in the name of an off-shore LLC. They’re focusing their funds on well-located, high and newly constructed buildings with lots of glitz, glamour and amenities. Typically they’re looking to pay $1 million to $3 million per individual unit.