Why NYC must keep its markets global
Canada recently banned investments in residential property by non-Canadians for two years, aiming to cool off an overheated housing market which saw the average Canada home price surge by 20% in 2021. Meanwhile, Florida Gov. Ron DeSantis wants to ban sales of homes and farmland in his state by companies from China, a “hostile” nation.
Can you imagine such measures in New York City? Of course, you can’t, because our “global capital” status means welcoming as many UK pounds, euros, Chinese renminbi, Japanese yen, Israeli shekels, Moroccan dirham and Saudi riyal as we can lure to the five boroughs.
Our great city remains, with London, the most powerful magnet on the globe for investment from all corners. Most New Yorkers know this and take pride in it. Sure, there’s been sporadic ire at outsiders before. A new “mansion tax” was introduced in 2019, for instance, partially resulting from backlash at absentee foreign owners who were leaving entire residential towers empty.
But political brainstorms to keep foreign buyers out of New York would make no sense in our city of three million immigrants from abroad. Even in the far-simpler Canadian market — where unlike the Florida proposal, the new law has a putative dollars-and-cents rationale — the restriction only “kills off economic opportunity” and “has done nothing to solve the affordability challenge in Vancouver,” Jim Costello, chief economist for Morgan Stanley-owned investment research firm MSCI, told the Post.
But the Canadian and Florida measures, while unthinkable here, are wake-up calls to an heretical question: Namely: can the Big Apple become TOO globalized, particularly as its political and business institutions lose their juice and the social fabric frays?
In fact, foreign net investment in New York City commercial property actually scored a $350 million deficit in the fourth quarter of 2022, according to MSCI. That may just be a small fraction of the total commercial market, but any decline of global capital is worrisome.
Foreign wealth is built not only into our bricks and mortar but into our collective identity. It’s part of our exceptionalism from the rest of the country. Not for nothing did Spalding Gray describe Manhattan as “an island off the coast of America.”
Overseas lucre is indispensable to the city’s treasury — and spirit. The sight of the Nigerian flag waving above its government-owned mission tower at East 44th Street thrills me to live in a place where the world comes together on a single narrow island.
The office tower that’s home to the New York Post, 1211 Sixth Ave., is owned by a Canadian pension fund. Neighboring skyscrapers are owned or partly owned by Japanese, Korean, Qatari and German entities — along with a handful of nations we regard as adversaries.
Tycoons from lands as disparate as Ireland, China, Nigeria, Brazil and Qatar own townhouses and condo apartments. Alibaba billionaire Joe Tsai, a citizen of Taiwan, Hong Kong and Canada, paid $157 million for a palace-in-the-sky at 220 Central Park South last year.
But there’s a catch: As foreign fortunes permeate our economy and culture, the city has become unmoored from the political, economic and social pillars that defined us — and our strength. Without them, Gotham threatens to devolve even further into an “open city” where buyers use empty apartments to hide ill-gotten gains from their governments — while our own institutions and communities wither.
A contentious but collective mighty effort after 9/11 brought forth recovery and renewal. No such all-in energy has followed the pandemic. If anything, New Yorkers are more at odds than ever before — over immigration, criminal justice, school curricula, ethnic and racial identity, and even bike lanes.
Some of our wealthiest citizens who donate to hospitals, arts institutions and other worthy causes are leaving for warmer, less-taxed climes. Financial firms such as Goldman Sachs and Citadel are testing the waters with distant satellites.
The city’s real estate industry, long a force for civic improvement and neighborhood regeneration despite widespread whining, lost much of its political clout. Dynastic real estate families, while still active, were eclipsed by publicly-traded giants more attuned to shareholders and global expansion than to local needs.
As a municipality, the City of New York, which was always a creature of the state, is now an abused captive of the state. Albany legislators even wrested away the mayor’s longtime prerogative of control of the streets with “progressive’ laws to empower criminals and emasculate the police.
The nagging fear that New York City is in decline can make even me, a passionate lifelong New Yorker, lose patience with the unchecked excesses of foreign “investors.” Outsiders, history tells us, always make the easiest targets in times of crisis.
I’m appalled by obscure absentee ownership that lets landmark properties such as 23 Wall St., where JP Morgan was born — and is currently owned by a joint Hong Kong-Angolan entity – fall into disuse and neglect.
I resent when foreign oligarchs, rubber magnates and tech moguls buy into those posh half-empty towers – collecting them as toys, while legions of homeless New Yorkers suffer in the cold.
I deplore the casual indifference and incompetence of the Chinese insurance companies that have left the “reimagined” Waldorf+Astoria a vacant, unfinished mess after six years of work.
But whenever I’m ready to tempted over “alien” encroachment, I’m reminded, too, that without a near half-billion-dollar investment by Belgium-based DTH Capital and a loan from a Chinese bank, local developer Rose Associates couldn’t have turned vacant office landmark 70 Pine Street into 600 rental apartments. Without Russian billionaire Mikhail Prokhorov, who invested $200 million in the Brooklyn Nets, there might not be a Barclays Center.
We need them all. So while Justin Trudeau and DeSantis trade in economic xenophobia, let foreign money bags buy as many homes here as they want. And let’s get our own house in order before we shut its doors to world.
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