The strength of the US dollar, combined with sky-high prices, is turning foreigners away from New York property, says a top Manhattan broker. And when they make up 40% of the Manhattan condo market, potentially that’s a big problem.
Brian Meier, a broker for Douglas Elliman says that when rising prices and exchange rates are taken together, property in Manhattan costs 40% more for foreign buyers than it did six months ago. He says that condominiums in the $10million-plus price category are staying on the market for longer. “I have a lot of new development [in Manhattan] that would have been sucked up by foreign nationals a couple of months ago,” he told DNAInfo.com. “That dried up.”
The US dollar index, which compares the dollar against the euro, yen, sterling, Canadian dollar, Swedish krona and Swiss franc, has risen by nearly 10% in the past quarter. A buyer from the Eurozone, for example, with €10million to spend, would now only be able to get a $12.5million property whereas just six months ago he could have got one for $13.5million, and in that time prices will have risen by some 5%.
But while there may be a temporary slowdown in foreign sales, other experts pointed out that the objective in buying in New York is often to “preserve and protect capital”, so foreign buyers will just choose a cheaper condo that will fit the budget. The point is, their money is safe and there is a possibility of a visa and a New York education.
By Christopher Nye, Editor, OPP Magazine