Wednesday, November 28, 2012

Chinese Development in NYC

Xinyuan Real Estate Company recently purchased a 216 unit condominium building in Brooklyn, NY, at a cost of $54.2m, making its first ever development in America. The firm plans to spend an additional $200m on this project. It is anticipated that sales thereafter will be between $250 and $350 million.
Xinyuan Real Estate Company is also looking for other projects in America.  The idea is to sell close to half of the units it builds to Chinese investors. According to Omer Ozden, (a partner at Beijing Capital, the private equity arm of the Beijing municipal government), Chinese investors it seems, are more likely to purchase buildings from Chinese developers in the US, than their American counterparts.  Chinese investment in American real estate has been growing steadily, with a focus on residential properties.

New York private equity is becoming increasingly popular for Chinese investors.  In recent years, the government in China has been making attempts to deflate the local housing bubble.  In order to achieve this, it has limited permission of property purchases.  Thus the Chinese who want to invest in real estate are instead turning to America.  Indeed, as the National Association of Realtors’ report noted, residential sales for the year ended in March saw $9bn in American residential sales from the Chinese.

The city of New York is also gaining popularity for Chinese investors as that is one of the places where they would like to live (along with LA, San Francisco and Miami).  Thus as Ozden noted, these investors are purchasing properties that they will seek to rent out or use as second homes or places for their children to stay while studying abroad.  In the past, Chinese investors have had a harder time locating the right property in America, as navigating US culture has not been so easy.  Thus Xinyuan Real Estate Company is now providing a great solution for Chinese looking to participate in New York private equity deals.

Thursday, November 15, 2012

Brooklyn Rentals Rare as Sandy Victims Look for Housing

Some of Sandy's Damage in Rockaway 

Lorraine Massoni and her three children were forced out of their Rockaway home by severe flooding in the wake of the devastation wreaked on New York by Hurricane Sandy. Since then the family has been staying with friends and relatives while they look for alternative digs for herself and her children. But so far she has only run into a brick wall.

“I have reached out to I can’t even tell you how many Realtors,” Massoni, 44, said as she drove around Brooklyn in her rented minivan with her children. “They tell you they have places, they say, ‘Let me talk to the landlord and see if they take dogs,’ then nothing. They don’t even call you back.”

Massoni recently looked at a two-bedroom flat in Kensington renting for a pricey $2,150 per month. The price is almost double the $2,495 she received from a federal relief agency to cover two months’ rent. And the Kensington place is, at 1,200 square-feet, about half the size of her Rockaway home- not big enough for her family of five. Massoni will just have to keep looking.

She is not alone in her frustrating efforts to find an alternative living arrangement that does not involve sleeping on a friend’s pull-out bed or staying in a relative’s guest room or basement. Rental vacancies in Queens and Brooklyn are about 2 to 3 percent, a low number causing heartache for many displaced New Yorkers.

“It couldn’t be worse timing,” says Jonathan Miller, president of Miller Samuel Inc. in New York. The market in Brooklyn is tight partly because banks are reluctant to write mortgages, so few renters are buying a home and moving out, he said. With hotel occupancy rates at high levels, Miller said, “there are just not a lot of places to stay.”