Posted by Leonard Steinberg on June 25th, 2013
The chatter of bad economic news coming from Brazil and China recently leads to the question: will Chinese and Brazilian buyers who have helped fuel a notable uptick in activity and pricing in the Manhattan luxury market disappear and how will that affect our real estate market?
I do believe we may see a temporary reduction in the volume of these foreign buyers, although its very possible that a spike may result as they try to remove cash from their country’s economies as they falter. Much of the cash that is coming here is probably cash that is avoiding tax collectors at home. China cut its growth forecasts for 2013 and 2014 to 7,75% (HORRORS!): we would be thrilled with half that! Along with Germany, the USA certainly seems like a bastion of economic stability right now. Our economy, while growing somewhat anemically around 3%, is growing, and the fundamentals are in place for continued growth, albeit at a 2 -4% rate. Is 2-4% that bad? I don’t think so. The surge in housing is certain to fuel job growth and probably demand for household goods. Demand is good for our economy. And the Chinese and Brazilian economies. A good immigration bill could add more tax revenues. All this bodes well for foreign buyers seeking safety.
Of all major world centers, Manhattan is mostly relatively inexpensive. Its recovery rate from corrections is rather fast. The supply of A-grade sites is extremely limited. Unlike more affordable foreing buyer markets such as Miami, the bulk of these foreign buyers in Manhattan are very, very wealthy all cash buyers. So while we may see a slowdown in foreign buyers, right now this appears like it will be short lived……if it happens at all.