These Were the Top Foreign Investments in NYC Commercial Real Estate in 2019
Foreign investors have always played a big part in the U.S. real estate market. Overseas companies, either on their own or in joint ventures with American affiliates, have closed some of the biggest commercial deals in history over the years.
New York City has historically been one of the main targets for these investors, as properties here tend to become more expensive each time they change hands. That’s why so many foreign buyers have invested huge amounts of capital in the city, eager to get their hands on trophy office assets in the uber-expensive Manhattan. Office asking rents in the borough are some of the highest in the world, and the demand for quality office space here is extremely high, so it’s definitely a worthy investment in the long run.
The role played by foreign buyers was highly debated in recent years, as in 2017, the Beijing government decided to impose tight controls on Chinese investment in U.S. real estate. The Chinese clampdown forced many companies to back out of deals or sell out their portfolios. Many feared that the retreat of Asian buyers would lead to a loosening of the tight investment market in New York City, but so far, that doesn’t seem to be the case.
Chinese buyers might be absent from newly done deals on the NYC commercial real estate market, but other foreign investors have not lost interest in the market, quite the contrary. The office sales activity in NYC is faring quite well, and the Beijing clampdown has made room for some new names to own trophy assets in Manhattan.
We wanted to get a better picture of who is buying commercial real estate in New York City lately. To this end, we extracted a list of the 20 biggest commercial deals to be closed by foreign investors in the city during 2019. Check them out below:
Asian investors are mostly absent from our list, with just 3 commercial deals closed in 2019. One Canadian investor, namely Brookfield Property Group, managed to land one sale in our top 20, while European buyers stole the show with 11 deals closed during last year. But what about Middle Eastern investors?
Middle Eastern Buyers Snag Close to $300M Worth of NYC Commercial Assets in 2019
The biggest office deal closed by foreign buyers in NYC in 2019 was that of the Coca-Cola Building at 711 5Th Avenue. In September, SHVO and Bilgili Group paid $937 million to purchase the Midtown Manhattan office asset from a partnership between Nightingale Group and Wafra Capital Partners, a subsidiary of Kuwait-based Wafra Inc.
Interestingly enough, the second-largest office deal of the year also involved the Coca-Cola Building, as well as foreign investors. The Fifth Avenue building first changed hands in August, when Wafra and Nightingale purchased it for $909 million from the Coca-Cola Company. SHVO and its partners had placed an initial bid to acquire the building, but didn’t manage to reach an agreement with the seller, so it sold to Wafra and Nightingale instead.
The plot twist followed just one month later, when the building sold again to the same companies which had initially wanted to buy the property from Coca-Cola. The double-play set up Wafra to become the top Middle Eastern buyer – and seller – in the city in 2019.
The next major sale to be closed by a Middle Eastern buyer happened in July, when the Abu Dhabi Investment Authority shelled out $100 million to buy the remaining 25% interest in 330 Madison Avenue from Vornado Realty Trust. The entity had held a majority stake in the 39-story Manhattan asset since 1989, and it bought the final stake from Vornado in order to be able to sell the property. Consequently, in November, the ADIA sold the property to Germany-based Munich Re for $875 million.
The iconic Chrysler Building also changed hands last year, when the Abu Dhabi Investment Council and Tishman Speyer sold the property to RFR Holding and Austria-based SIGNA Holding GMBH, for a mere $150 million. It was, however, the third-largest office deal closed by foreign buyers in NYC during last year.
Alduwaliya Asset Management also had a good year in terms of real estate investments, closing two major office deals in Manhattan. The Qatar-based investment firm bought two office properties from Waterman Interests and USAA Real Estate. It paid $81.5 million for the asset at 142 West 36th Street, and $56.6 million for the one at 234 West 39th Street. The company first entered the NYC real estate market in 2015, when it acquired the office property at 250 West 39th Street from Lincoln Property Company.
Finally, the last Middle Eastern buyer on our list of 2019’s biggest foreign investments is the Kingdom of Saudi Arabia, which purchased the entire sixth floor at 866 United Nations Plaza from The Carlyle Group. The Carlyle Group sold the four commercial office condominium units for a price tag of $59.2 million in July. According to the property website, the sixth floor now houses the Permanent Mission of the Kingdom of Saudi Arabia to the United Nations.
We reviewed the top commercial sales in NYC in 2019 and selected the transactions that featured at least one foreign buyer.
Resources: the NYC Department of Finance Rolling Sales data.
February 18, 2020