By Thornton McEnery

November 16, 2011

According to the United States Bureau of Labor Statistics, the relative value of the Chinese Yuan to the U.S. Dollar has increased almost 23 percent since 2001. That figure indicates both the declining buying power of the U.S. economy and the surge of Chinese consumers. Logically, as the trend continues, we will see more Chinese investment in American goods. And historically, there’s no American commodity more precious than real estate.

And what real estate is more prized—or more prohibitively expensive—than New York City’s most famous borough, Manhattan? Here, international buyers have kept prices good, and exceptionally high, for many decades.

“You see the ebb and flow of the global economy from a unique perspective when you deal in New York City real estate with international clients,” says Amy Williamson, vice president of sales for Prodigy Network, an international real estate company based in Manhattan. “International buyers keep our market alive… it’s a fact of this global economy.”

But that symbiosis between foreign money and local market health is now in flux as global economic fires continue to blaze out of control domestically and throughout Europe. But the problems in the Eurozone have done no serious damage to the Yuan, and increasingly active Chinese investors have come to the forefront of the American real estate scene.

According to a report recently published by the Association of Foreign Investment in Real Estate, in 2011 New York City real estate ranks No. 1 as the top global city for foreign investments, ahead of Washington D.C., London, Paris and Shanghai. In addition, according to a report published by NuWire Investor, Chinese buyers accounted for 9 percent of the market of international buyers of American homes for the 12-month period that ended in March. That figure is almost double what it was just two years ago and speaks to the alacrity with which Chinese buyers are growing their share of the U.S. market. Local brokers attest that they’re as eager to buy in New York.

“New York City has always been a favorite of Asian investors, like the Japanese in the 1980s and so forth,” says Michael Chen, an Asian market specialist at Bond, a real estate firm in New York. “In the past five years, the big money coming out of China has made it easier for Chinese investors.”

“We’ve been seeing a steady growth of Chinese buyers locally,” says Stephen G. Kliegerman, president of Terra Development Marketing. “Especially over the past year or so.”

Larry Kruysman, director of sales at the Aldyn, a new residential tower on Riverside Drive, reports similar growth. “Since we opened in January, a good percentage of our visitors have been Chinese buyers,” he says.

In this climate, local brokers have become more aware of what attracts the interest of potential Chinese buyers and are developing marketing plans, transatlantic partnerships and specific client service skills to better attract, serve and guide Chinese buyers.

“Corcoran was looking for years for a way to make inroads into China,” says Gordon Hoppe, senior vice president and direct of sales at Corcoran Sunshine Marketing Group. “The trend in more Chinese investment was growing, but how did we capture that?”

Mr. Hoppe and his team found their inroad in partnership with Century21 China aimed at making it easier to buy into New York from China.

“Century21 arranges what I’ll call group tours,” Mr. Hoppe says. “After acting as a China-based education venue for these prospective buyers, they can send them over here ready to make educated decisions.” He says that a growing understanding of the mindset held by the Chinese investor has been invaluable in helping Corcoran grow its sales.

New York City brokers also benefit from deepening their understanding of what Chinese buyers want in their local investment. As they do so they’re finding that there are definite common preferences.

“Recognizable neighborhoods and new construction are universal to foreign buyers from any continent,” Ms. Williamson says. “SoHo is always desirable, and most international buyers are looking for newer construction, especially branded real estate like W Residences, or anything Trump.” A Trump SoHo sales representative confirmed to YUE that “23 percent of closed sales at Trump SoHo have been from Asia, with the largest number from China.”

“These buyers definitely seem to prefer newer construction, especially in neighborhoods that have cache,” says Mr. Kliegerman, cited Halstead’s new Upper West Side development 88 Morningside.

“ ‘New Construction’ is a key phrase in [their] decision-making,” Mr. Hoppe says of Chinese buyers. “And [they] tend to focus very closely on core Manhattan neighborhoods.”

Another consistent theme among Chinese buyers in New York City is the rationales behind their purchases.

“Chinese buyers seem to have a strong desire to buy something for their family,” Mr. Hoppe says. “For instance, a number of our clients have purchased apartments for their children who are studying here. Of course, these properties are also investments.”

Communication is particularly important in managing language and time issues unique to Chinese investors abroad. “It helps potential buyers over there to feel more comfortable with the market over here by giving Chines investors the comfort of working with a domestic firm that we are now partnered with,” Mr. Hoppe says. “It’s very useful in helping us communicate over here.”

Centurion is just one of many projects making clear bids to woo Chinese investors. Many other local real estate firms are building infrastructures that will use the kind of strategies Michael Chen is implements at Bond’s New York office, whose company is the only New York City-based real estate firm currently offering a Chinese-language version of its website and has developed a system of educating and communicating with their Chinese clients. Carrie Chiang, Corcoran’s Senior Vice President with 26 years of experience in the real estate business, tried to serve her many Chinese clients who have purchased in New York real estate for their personal use or as investment properties with the assistance of a management company that leases and maintains properties for her clients. “We truly offer one-stop shopping,” Ms. Chiang describes her approach to distinguish her team.

This flurry of activity around a single ethnic group of buyers might mark the beginning of another chapter in the story of New York City real estate. One major milestone: SOHO China’s recent participation in Vornado’s development of the large commercial tower the company plans to build over the Port Authority bus terminal just west of Times Square. The Beijing-based firm’s investment is estimated at $500 million to $700 million. Numbers that strong suggest a bright future for the Chinese in the New York City market.

“I don’t see this getting weaker at all,” Mr. Kruysman says. “I only see it continuing to grow.”