Arab buyers eye prime New York properties as Russians exit market

Knight Frank

• Middle Eastern enquiries for New York real estate have risen 50%
• Almost 450 $10 million-plus properties were sold in the city last year
• The slowdown in Russian buyers began in 2017, according to agents

The wealthiest city in the world has seen a sharp rise in interest from Middle Eastern property buyers, replacing the void left from the exodus of super-rich Russians.

A spokesperson for real estate firm Knight Frank told AGBI that the number of enquiries for New York property from Middle Eastern customers had increased by 50 percent since the pandemic.

New York had a record-breaking 2021, with 446 sales of properties priced above $10 million. Prime property prices in Manhattan increased 7.3 percent in the first half of 2022 and Knight Frank has forecast that they will increase 6 percent for the full year 2022 and 4 percent in 2023.

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Georgina Atkinson, Knight Frank’s head of US residential developments, said demand “really started to come back in 2021” and since then it had spotted the growing interest from Middle Eastern buyers.

“We probably saw the international buyer truly returning in October 2021. That’s when we started to see restrictions lift and our clients travelled to New York,” she said.

After Russia invaded Ukraine in February, the US imposed sanctions on Moscow and luxury assets owned by some Russian oligarchs in American cities were seized.

With US businesses prohibited from doing business with Russians, other international buyers stepped in.

Until that point, wealthy Russians were among the biggest foreign investors in New York. A 2017 report by real estate data firm TripleMint found that the biggest foreign buyers in New York were from the UK, followed by Russians, Canadians, Indians and French. Emiratis were ranked 16th.

Jade Chan, sales director at New York firm Douglas Elliman Real Estate, also pointed to a decline in the number of enquiries from Russians.

“The Russian buyer for us in New York has kind of gone. Obviously, New York had a huge influx over the past years, but I personally haven’t really dealt with a Russian buyer probably since about 2017, which was when it started to slow down,” she said.

Turbulent economic conditions in the UK are also putting pressure on British investors, opening up the market further.

“The UK has been affected, of course, with the currency, but we definitely still see that demand from Middle Eastern buyers, and of course Asian buyers, and it’s mainly in New York,” Atkinson said.

One of the luxury properties seeing a lot of interest from Arab buyers is the Mandarin Oriental Residences, Fifth Avenue, located close to Central Park. The property is due to start handing over homes to owners in the first quarter of next year and units range from $2.5 million up to about $15 million.

Chan said around half the buyers in the development are expected to come from overseas, which is well above the national average.

The National Association of Realtors (NAR) said, that across the US, foreign buyers accounted for just 1.6 percent of buyers between April 2021 and March 2022.

New York accounted for 4 percent of all foreign buyers in the US, the NAR said, with 31 percent of those coming from Asia/Oceania, 22 percent from Europe, 15 percent from Latin America and 5 percent from Africa. Arabs still had some way to go to make it into the rankings.

According to the NAR, prices in New York average around $17,191 per square metre – nearly three times the figure for Dubai but still below London ($26,262) and Hong Kong ($28,570).

The Wealthiest Cities in the World for 2022 report, published last month by Henley & Partners, placed New York at No 1, with around 345,600 millionaires, including 737 centi-millionaires (fortunes of more than $100 million) and 59 billionaires.