It was only last Wednesday that her company closed what could be the largest deal on Long Island’s North Shore this year for $17 million with a Chinese investor. Barbara Candee, high-end director at Daniel Gale Sotheby’s International Realtors, is again courting a Chinese buyer.
Speaking absolutely no English, the client from mainland China is eyeing a nine-acre property in Nassau County’s Mill Neck, with an exquisite, 14,000-square-foot house that “looks like a castle,” a four-bedroom guest cottage, a pool house and a private beach. The younger ones of his six children will likely attend schools in the nearby districts, where “excellent private schools” can be found within three miles, says Candee.
While Manhattan real estate remains the hottest destination on the East Coast for Chinese cash, Long Island has gained significant traction in the past two years. Across Douglas Elliman’s 26 offices on Long Island, the transaction volume with ethnic Chinese buyers as a percentage of total volume grew 18% in 2013 (meanwhile the total volume grew 19%). A salesperson at Douglas Elliman, Linda Zhao, estimates that international Chinese now constitute 30% of interested buyers at open houses. Kevin Brown, a Sotheby’s broker, says at least 20 of his Chinese clients requested to look at properties on Long Island last year—just a couple years ago, barely anyone had an interest.
Chinese buyers appear to have a peculiar appetite for Long Island’s North Shore, about 20 to 30 miles east of Manhattan. The area’s history of affluence, especially in the early 20th Century, has earned it the nickname “Gold Coast.” Its housing prices are only second to those at the Hamptons on the eastern tip of Long Island, where several Forbes billionaires as well as celebrities like Jennifer Lopez and Billy Joel own properties. The North Shore is also the backdrop for the lavish lifestyles depicted in F. Scott Fitzgerald’s 1925 novel “The Great Gatsby,” the recent movie adaptation of which was shown in China.
Unlike properties in Manhattan, which are often bought to be rented or to preserve the investor’s wealth, those on Long Island are almost exclusively for family use. The growing interest reflects Chinese buyers’ intention to invest not just for a quick return, but for a lifestyle and the future of their children. The North Shore has all there is to offer on those fronts: the liberty and privacy offered by its vast and open space, fresh air, proximity to the beach, quality education, and convenient transportation to New York City, especially the Chinese-populated Flushing District.
It’s difficult to determine which of the factors presents the most allure. Education remains a top priority for Chinese buyers, as seen in the popularity of Great Neck, Jericho and Manhasset—what real estate agents have branded the “good school districts.” As smog clouds cities as far as Tibet’s Lhasa and contributes to 3 million deaths in China, however, agents are now touting Long Island’s clean environment as the irresistible charm.
“There you’ve got the fresh air, the waters, the beautiful gardens. Everything is just so clean. When you wake up in the morning you can even hear the birds singing.” says Zhao.
Cash payment and quick decision-making (often within 2-3 days) have made Chinese buyers favorable customers in Long Island, Zhao notes, though the demand is not yet strong enough to drive up housing prices. The transaction amounts range widely between $1 million and $10 million for Chinese buyers. In comparison, Douglas Elliman’s annual report says the median sales price among all transactions in the affluent Nassau County was slightly above $400,000 last year.
Beyond Long Island, Chinese ranked second among all international investors in buying U.S. homes last year, second only to the Canadians. Twelve percent of the overall U.S. real estate transactions from internationals were made by Chinese, according the National Association of Realtors.
A number of factors have driven the demand, including the low U.S. housing prices relative to China’s, the appreciation of the Yuan, and low interest rates in China, among others. More Chinese are also looking for safe havens for their money, as President Xi Jinping’s crackdown on corruption intensifies and the economy is expected to slow to 7.2%.
Manhattan has grown quickly as a hot target for real estate investments in the past two years. Sotheby’s Kevin Brown says he alone has some 150 “serious buyers from China.” Transactions with the Chinese accounted for 50% of all his deals last year. The year before, the figure was only half of that. In the commercial real estate market, Chinese companies have snatched several office towers including the iconic One Chase Manhattan Plaza.
Overall, however, California claims the crown of the most popular destination, hosting more than half of U.S. real estate purchases by Chinese last year, according to NAR. The same factors that have contributed to the boom there—education quality, word of mouth and a pleasant living environment—are now bringing buyers to the East Coast, especially Long Island (perhaps minus the mild climate).
Forbes
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