Chinese developer Xinyuan Real Estate Co. is forging ahead with plans for a condominium property on Manhattan’s far west side, even as the company’s New York-based executive vice president sees signs of a glut in the luxury-home market.
Xinyuan is distancing itself from the plethora of skyscrapers aimed at ultra-wealthy investors by designing its first project in Manhattan to appeal to dual-income families and other upper-middle-class buyers, both American and Chinese, according to John Liang. Apartments will sell for as much as $2,000 a square foot, he said. That’s less than the $2,775 average for new-development listings in the borough in 2015, according to a report by Halstead Property Development Marketing.
With a mounting supply of high-end homes, “New York’s luxury-condo market is now at a very, very dangerous edge of bubbles,” Liang said in an interview. “It’s a myth that Chinese buyers all come to U.S. loaded with cash.”
Xinyuan completed its $57.5 million purchase of the site, on 10th Avenue between 44th and 45th streets, this month and plans to start construction on what it calls a boutique, mid- tier property as early as next year. About 30 percent of the buyers are expected to be Chinese, about the same share as in the Beijing-based company’s first New York project, Oosten, on Brooklyn’s Williamsburg waterfront, Liang said.
Chinese Economy
With China’s economic growth slowing and its currency, the yuan, depreciating, an increasing number of Chinese investors are seeking dollar-backed assets. More than $840 billion left China in the first 11 months of last year in an unprecedented exodus, according to data compiled by Bloomberg. The offshore yuan dropped for a fourth day on Friday as investors became more bearish on the currency amid capital outflows.
“The currency uncertainty will actually encourage more Chinese capital to go overseas,” Liang said. “We have not seen any signs of waning demand from Chinese buyers.”
At about $2,000 a square foot, a two-bedroom condo in Xinyuan’s west side project would cost about $1.5 million -- a price that’s “affordable for upper-middle-class New Yorkers,” Liang said.
Luxury Boom
Xinyuan is joining builders such as Extell Development Co. and HFZ Capital Group’s Ziel Feldman, who are targeting a lower price point with their newest projects as a way of satisfying a shortage in Manhattan. The borough’s inventory has skewed toward the high end after a post-recession development boom produced a flood of lavish condos for multimillionaire buyers. In the third quarter, the supply of homes for sale in the top fifth of the market jumped 8.9 percent, according to an analysis by real estate website StreetEasy. For the other four levels combined, listings fell more than 3 percent.