For the first time, Chinese investors have become the biggest foreign buyers of apartments in Manhattan, real estate brokers in the city estimate. The move sees China's super-rich increasingly take up the role previously held by their Russian counterparts, whose home-buying activity has reportedly dropped off amid fears that U.S. sanctions prompted by the Ukraine crisis could target wealthy oligachs from the country.
The trend has seen Chinese individuals pouring money into property in New York and a few other major cities around the world, including London and Sydney, as they seek safe havens for their cash and to 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, the rest of Europe 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 soaring prices in those cities. Hong Kong has the second most expensive housing market in the world, behind Monaco, with Manhattan trailing in sixth place, according to British real estate research firm Knight Frank.
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 if their children are too young to walk. 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."
Amid political turmoil at home, China may be experiencing what some analysts call “capital flight.”
“There is significant political upheaval. President Xi Jinping is looking to clean house,” said Arthur Dong, an economics professor at Georgetown University who focuses on Chinese business trends, referring to Xi’s effort to crack down on graft in the public sector. Beijing’s ongoing anti-corruption campaign has seen federal and local officials unseated, their assets seized and some sent to jail.
“People are looking for an exit. They don’t feel certain that as a result of the political reforms and the political corruption that they are going to be spared. They are trying to take their personal resources outside the country.”
Foreign real estate is often an attractive sector for China’s wealthy to “park” their cash, real estate professor at the Vancouver-based University of British Columbia Tsur Somerville told Al Jazeera. Vancouver in recent years has also seen an influx of Chinese rich purchasing properties, a phenomenon some have blamed for sky-high rents.
"If you're living in a world where U.S. Treasuries are paying 1 percent [interest], there's something to be said for wanting to park cash in an asset that holds value. Real estate at some level is less traceable and subject to being frozen than bank accounts," he said.
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.
The Chinese are also venturing out to Long Island, where they are buying Gatsby-esque mansions set atop rolling greens.
"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.
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.
Monika Tu, a broker at top-end real estate firm Black Diamondz Property Concierge in Sydney, said 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," said 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 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.
Al Jazeera and Reuters