Worries Became Reality
A report from the Washington Examiner. “In a little-noticed statement, the Treasury bureau responsible for investigating financial crimes shared a remarkable money laundering statistic last month. Thirty percent of the cash purchases of high-end real estate by shell companies in six major cities involved a suspicious buyer, according to an investigation conducted by the Financial Crimes Enforcement Network to find out who was behind the deals.”
“In some neighborhoods, the condos may be sold out — but empty. In Manhattan, for example, the blocks between Lenox Hill and Central Park, between 63rd and 70th Streets, are nearly 40 percent unoccupied, according to the Census Bureau. On the Upper East Side’s most exclusive tract, along Fifth Avenue, more than a quarter of properties are vacant.”
“The reality is similar in other exclusive neighborhoods throughout the country. More than half of the beachfront properties in the neighborhoods at the ends of Miami Beach, Bal Harbour and the southern tip of South Beach are unoccupied. Because of unoccupied downtown condos, the South Beach neighborhood of San Francisco is one-fifth unoccupied, in the middle of one of the tightest housing markets in U.S. history.”
“In certain neighborhoods overlooking the beach in Los Angeles and San Diego, the story is the same — a third of properties in Malibu are vacant, as are half of the homes in San Diego’s Oceanside neighborhood.”
The Real Deal. “Late last year, Steven Ho saw alarm bells on social media: The Chinese government was gearing up for a major crackdown on foreign investment, and on messaging platforms such as WeChat and Line, Ho’s friends told him they were concerned that money would be tighter. In January, those worries became reality, as the government imposed exacting new capital controls that required Chinese citizens to disclose the purpose of their foreign investments.”
“In the days that followed, numerous callers told Ho, a senior loan officer at Queens-based Quontic Bank, that they were unable to get their money out of China to finance real estate investments in New York. ‘They’re saying, ‘What’s the max I can borrow?’ and they’ll figure out other means [for repayment] later,’ Ho said.”
“Since the January regulations, local banks are seeing a wave of interest from buyers who want to invest in New York real estate, but whose funds are stuck in mainland China. Cindy Morin, marketing director for Xin Development, an arm of Chinese builder Xinyuan Real Estate, said one buyer recently backed out of a deal for a $1.4 million apartment at the developer’s Oosten condominium in Williamsburg. ‘They couldn’t get the down payment out,’ she said.”
