RIP Cool London

[meister]

http://www.telegraph.co.uk/men/thin...l&utm_source=facebook.com&utm_campaign=buffer

 

[jrd617]

This is not a UK-specific phenomenon.

In the US too, people are moving back to the cities from suburbia, sending rents to the stratosphere.

 

[Monkeyface]

It is UK specific because the world's wealthiest are using central London as an investment opportunity. People from Russia, the Middle East and Asia to name but a few are buying up real estate like madmen, causing the prices to skyrocket. It is very understandable, London is a relatively safe place to park your money, and centrally located between Europe and the US.

An interesting reply:
http://www.telegraph.co.uk/men/thin...-London-is-the-great-theatre-of-our-time.html

 

[akoustas]

It's the same thing in Canada, especially Vancouver and Toronto. But it's a lot harder to live with yourself paying big rent to live in Toronto of all places...at least New York and London have some caché and substance, diluted as they may be.

Paris is the horror scenario, I've never seen such a sad decline to blasé medeocrity (food included)

 

[meister]

Sydney is becoming too expensive after the last real estate burst.

 

[woodywoodford]

Vancouvers famous for this issue, I read about entire neighborhoods sitting empty there cause of asian investors buying them up and not actually moving over.

 

[jrd617]

For the US, it's a reversal of this trend that started in the 50s

http://en.wikipedia.org/wiki/White_flight

is the new:

 

[papa kot]

I like this quote "...being a high-end cog in the machine is not cool."

Welcome to Pottery Barn America, everybody ;-)

 

[Harold falcon]

In the US they call this gentrification.

 

[meister]

The Chinese take Manhattan (apartments)
Reuters | April 25, 2014 | 02:08 PM EDT
For the first time, the Chinese have become the biggest foreign buyers of apartments in Manhattan, real estate brokers estimate, taking the mantle from the Russians—whose activity has dropped off since the unrest in Ukraine and the imposition of sanctions against Russia by the United States.
Wealthy Chinese are pouring money into real estate in New York and some other major cities around the world, including London and Sydney, as they seek safe havens for their cash and also establish a base for their children to get an education in the West.
Reuters asked five of the top real estate brokerages for their ranking of foreign buyers in New York City. The Chinese ranked first in both volume and value of sales in all their estimates. Opinions differed on just how the Russians, Europeans and South Americans stacked up next.
There are no official figures collected on the national and ethnic backgrounds of home buyers because of U.S. fair housing laws, designed to protect against discrimination.
The Chinese interest is mainly a valuation play, real estate experts say. After the U.S. housing bust in 2007-2010, home prices in major U.S. cities fell to levels that made them attractive. While U.S. prices have been recovering, they are still appealingly low by comparison with many other parts of the world.
Many Chinese buyers are switching their interest away from markets like Shanghai, Hong Kong and Singapore amid fears that prices have soared to frothy levels in those cities. Luxury apartments cost between $4,100 and $5,000 per square foot in Hong Kong, while in Manhattan and Sydney they cost half that, ranging from about $2,100 to $2,500, according to Knight Frank's Prime International Residential Index. London is also cheaper, at $3,300 to $4,100 per square foot.
The brokers say that many Chinese buyers are also investing abroad so they can own property near major educational institutions. Some are buying homes near top colleges - even though their children are so little they can't walk yet. More than 80 percent of wealthy Chinese want to send their children overseas to school, according to the Hurun Report, a Shanghai-based publication.
"By far and away, the Chinese are the fastest growing demographic," said Dean Jones, a U.S.-based broker with Sotheby's International. "They are the top consumer for real estate, and New York is front and center."
Added Pamela Liebman, CEO of the Corcoran Group, one of the best known New York real estate firms: "In sheer numbers, the Chinese outspend the Russians in every segment of the market."
The Russians: 'They're gone'
In Manhattan, it wasn't long ago that Russian oligarchs dominated the gilded world of real estate, gobbling up status-heavy, marquee properties, such as an $88 million, Robert A.M. Stern-designed penthouse and a $75 million mansion with a ballroom and a rooftop aerie.
Now, many brokers say, Russian buyers have become scarce largely because of fears that the struggle over Ukraine will worsen leading to increasingly tough U.S. sanctions on politically-connected and wealthy Russians.
"They're gone, they're gone," said Sotheby's International broker Nikki Field, "They've been gone since the Crimean outbreak."
The Chinese grew to 28.5 percent of Field's international business in the first quarter of 2014, up from 19 percent last year. "We've only scratched the surface with Chinese demand," Field said.
Chinese buyers typically used to pick up properties in the $1 to $5 million range in New York, often buying two and three at a time for investment purposes, the brokers said.
But lately they have been moving up market, brokers say. The current in-vogue building among the Chinese is Central Park's One57, a new skyscraper designed by Pritzker Prize-winning French architect Christian de Portzamparc, where they can spend $18.85 million for a three-bedroom or $55 million for an apartment taking up the entire 81st floor. The building comes with all of the amenities of a five-star hotel.
The Chinese are also venturing out to Long Island, where they are buying Gatsby-esque mansions set atop rolling greens.
Broker Shawn Elliott ferries around groups of Chinese buyers in Rolls Royce and Mercedes-Benz luxury sprinters every week, often catering to entire families at a time.
"They're looking for trophy properties," said Elliott. "They're looking for their children to be comfortable, and to be near Columbia or New York University."
Some Chinese aren't even bothering to come to the United States at all, going so far as to pick up multi-million-dollar properties sight unseen.
One Chinese buyer recently purchased two properties, worth $13 million, at the Baccarat Hotels & Residences in New York. The entire deal was done via the Chinese social networking site WeChat, according to the broker who did the deal, Douglas Elliman's Emma Hao.
"I think the Chinese trend is onwards and upwards," said Liam Bailey, a partner with Knight Frank. "There will be more Chinese buyers, and they will take more share of the market."
New York isn't alone.
In Sydney, the Chinese became the top buyers of new luxury homes last year, according to sales research conducted by Knight Frank.
Shanghai businessman Wang Jiguang has already picked up two houses in another major Australian city, Melbourne, and one apartment in Sydney. "My child is going to study abroad, and we are just preparing some overseas assets for our child, which will be less risky," Wang said in a telephone interview from Shanghai.
Mainland Chinese were the top foreign investors in Australian real estate last year, according to Australia's Foreign Investment Review Board. They bought $5.9 billion worth of property, accounting for 11.4 percent of total foreign investment in real estate, FIRB said.
The data includes both residential and commercial properties. But the average value of the purchases for China is the lowest of all the countries, which suggests a large number of the deals are for residential property.
Monika Tu, a broker at top-end real estate firm Black Diamondz Property Concierge in Sydney, says that over the past year mainland Chinese have become 80 percent of her company's business.
"There is nearly no local market for top-end properties," says Tu.
That fact has made the local headlines, with some accusing the Chinese of "pricing out local buyers". In March, Australia's federal parliament announced an inquiry into foreign investment in the sector in a bid to find out whether local real estate deals are being properly policed.
In Manhattan, some locals are also starting to grumble, brokers say, about the new "China Price", a phenomenon that can see Chinese buyers sweep in and outbid other buyers, often with all-cash offers.
In London, robust property laws and British universities are a big draw for the Chinese. They became the city's number one foreign buyer last year, according to Knight Frank, accounting for 6 percent of all purchases over 1 million pounds ($1.68 million). The Russians accounted for 5.2 percent.
"The Russian buyers are a maturing market," said Bailey. "And they aren't growing anything like the Chinese buyers."

 

[upthewazzu]

What do these foreign investors plan on doing with these high-end properties once there are no more wealthy foreign investors to pay the rediculously high prices? Once everyone else is priced out, then what?

 

[Monkeyface]



What do these foreign investors plan on doing with these high-end properties once there are no more wealthy foreign investors to pay the rediculously high prices? Once everyone else is priced out, then what?

Then the bubble pops! That's not going happen anytime soon though.
I don't think most foreign property buyers are looking for returns, hence them being ok with paying very high prices. They're probably not a part of the buy to let investors, as they're just looking for a safe place to park a portion of their money and possibly a place to live if they ever want to leave their country or raise their kids abroad.
I might be wrong about this though.

 

[upthewazzu]

Then the bubble pops! That's not going happen anytime soon though.
I don't think most foreign property buyers are looking for returns, hence them being ok with paying very high prices. They're probably not a part of the buy to let investors, as they're just looking for a safe place to park a portion of their money and possibly a place to live if they ever want to leave their country or raise their kids abroad.
I might be wrong about this though.

Interesting take. I've read a lot about the Chinese real estate market over the past couple years and part of me thinks they're doing this because that's all they know how to do. Any other kind of investing would be considered much too risky, plus they already have loads of experience dealing with high end real estate.

The bubble will pop, just not sure when. It seems like people have been predicting doomsday scenarios for the Chinese market for a while now with no such results.

 

[meister]



Interesting take. I've read a lot about the Chinese real estate market over the past couple years and part of me thinks they're doing this because that's all they know how to do. Any other kind of investing would be considered much too risky, plus they already have loads of experience dealing with high end real estate.

The bubble will pop, just not sure when. It seems like people have been predicting doomsday scenarios for the Chinese market for a while now with no such results.

In China you can be in the penthouse today and the outhouse tomorrow just for saying or doing the wrong (right?) thing. There has been talk already that half the Chinese millionaires have left PRC already and the further 50% will leave within the next 20 years. PRC is so uncertain what with so much money made by guanxi tactics. Most sensible millionaires want safety for their money and families and that only means democratic countries. Hence real estate investment is a kosher way of achieving the best outcome.

 

[unjung]

London is just realizing this now? NYC, Beijing... this has already happened.