Apartment sales listed on the internet are nothing new. However these particular listings are at the forefront of a new, and possibly powerful, movement in real estate. China’s largest real estate website, Soufun.com, has listed ads for apartments in The Oosten, a project acquired by Xinyuan Real Estate, in what was the first major American property acquisition by a Chinese firm. Since this ground breaking transaction several other Chinese real estate companies have come to the market with cash, one a sixty-one story residential building bought by China’s largest developer.The question that remains to be answered is: can China sell New York to the Chinese?
In the case of The Oosten, marketing materials include artists renderings, photos of daily life in New York City and pictures of Xinyuan officials taking part in American functions. Ads include contact numbers that connect potential Chinese buyers to a toll free Chinese phone number. The number allows buyers in China to connect with sales agents in China. Potential buyers can discuss apartment sales in New York without ever having to speak to anyone in the United States. Experts believe this new model may pave the way for outbound investment. Wealthy Chinese individuals and firms will be able to buy a home in the United States without ever leaving their native China or ever speaking or dealing with anyone who is physically in New York.
Unlike Americans, who often hang back from buying before project completions in fear of the risk of early sales, the Chinese real estate buying population is accustomed to buying well before project completion. Chinese investors have already proven to be more than interested in buying homes with the rapid sales of new homes in Sydney Australia, which have yet to even break ground. It was announced in December of last year that all of the units were purchased, the majority by Chinese clients. The developer, Greenland Group, has a Brooklyn project underway at a reported four billion dollars. Just last month the China Vanke group broke ground on its project at the elite address of 610 Lexington, partnering with Chinese developer CINDA and American real estate companies RFR and Hines.
While it looks like New York City real estate sales to Chinese investors are soaring, questions still remain. American real estate buyers are familiar with the ups and downs of the United States market. Prices do not always go up. Numerous factors have to be taken into account. Then there’s the fact that buying homes in New York goes hand in hand with significant property taxes and other related costs. Chinese investors may or may not be prepared to contend with these considerations. The biggest question that only the future will tell is whether Chinese investors will be pleased with the outcome of purchasing American homes over the phone, sight unseen, from contacts in Beijing or Shanghai.
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