European home buyers and investors used to be big in Manhattan. Buoyed by a strong euro and pound, embolde ned by a wide selection of new-development condos and verdant credit markets, the Europeans virtually invaded the borough to the point where their very presence became shorthand for the real estate market’s success.
“The Russians Are Coming” screamed a 2004 New York headline; “An Irish Taste for Real Estate in Manhattan” proclaimed a 2007 article in The New York Times.
Those days are over. On Oct. 10, the euro fell to $1.3579, its lowest level against the dollar in 14 months, according to the European Central Bank, and Europe’s economies have joined America’s in the muck.
Imagine, then, Manhattan as an I Am Legend-esque wasteland, with suddenly wide-open sidewalks, deserted luxury condo buildings and dilapidated boutique hotels. O.K., so it won’t be quite that apocalyptic. Still, the absence of a robust Europe will soon be felt in all corners of real estate.
According to Jonathan Miller, president and chief executive of appraisal firm Miller Samuel, foreign buyers, including many from Europe, make up approximately a third of Manhattan’s new-development condo buyers.
Commercially, foreign investors accounted for 40 percent of Manhattan’s investment sales volume in the third quarter, according to brokerage Cushman & Wakefield, spending $7.4 billion (the stats are culled from deals of at least $10 million each).
Eric Michael Anton, the executive managing director of real investment firm Eastern Consolidated, has noticed a significant decline in the number of European-led deals in the commercial sector. “We sold a lot of commercial property to Irish and British firms in the past, but it’s pretty grim right now in terms of European money coming in,” he said.
“Tons of deals have fallen apart. … It’s rough at the moment for everyone, everywhere,” Mr. Anton said.
Of the 8.76 million foreign tourists who visited New York in 2007, almost four million were from England, France, Italy, Germany, Spain, Scandinavia, Belgium, Luxembourg and the Netherlands, according to City Hall’s tourism arm. This influx helped drive city hotel rates and nightly occupancy levels to consistent records.
But! Just last week the city reduced its tourism projections by nearly a half-million people for this year; and this holiday season may end up being a very slow one for tourists.
It’s this take-away factor that worries brokers and sellers and others, the idea that—poof!—away could go some of the city’s most active investors and home-shoppers. The possibility of a European slump, coupled with a dour Wall Street economy, has some analysts rightly concerned. “The fact is,” Mr. Miller said, “two of the biggest drivers of the past several years are not expected to show up in the way they have in the past in 2009.”