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Deals & Dealmakers

Germany says auf Wiedersehen to Manhattan investment

By Konrad Putzier

Foreign investment in Manhattan real estate reached a record level of $5.5 billion in 2013 — almost double the previous record of $3.1 billion in 2007.

While this boom was driven by Chinese demand, previously dominant German buyers virtually disappeared in 2013.

New research by commercial brokerage Colliers International found that Germans recorded no major sales in the past year.

German entities had been the biggest investors in Manhattan between 2007 and 2013 with a total spending of $4 billion — well ahead of Israel’s $1.9 billion, the United Arab Emirates’ $1.8 billion and Canada’s $1.6 billion.

JAMES MURPHY

“Cap rates are low in New York,” Colliers’ executive managing director James Murphy explained. “Historically German investors here have been closed-end. They are now being priced out of the market.”

While German buyers are leaving, Chinese are swarming in, accounting for $1.4 billion of investments in 2013 alone. Notable investments include Fosun International’s $725 million purchase of One Chase Manhattan Plaza, and SoHo China’s 40-percent stake in the General Motors Building for $680 million.

This marks a remarkable turnaround for Chinese buyers, who had been virtually absent from Manhattan in 2007 and 2008.
Behind China, Canada ($893 million), Norway ($884 million), Brazil ($680 million), Singapore ($650 million), and the United Arab Emirates ($650 million) were the biggest buyers in Manhattan in 2013. According to Colliers, foreign investors comprised 28 percent of all Manhattan buyers in 2013 – the highest percentage recorded in the past six years.

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