- Matt Ward
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Foreign Governments Paying Cash for Pricey Manhattan Real Estate
Foreign governments are a growth engine for New York City commercial and residential real estate at a time when many cash-strapped European nations are facing financial crises. For example, Sri Lanka’s Permanent Mission to the United Nations has $8 million to spend and is looking at Manhattan office space. Laos recently paid $4.2 million in cash for a five-story townhouse in the Murray Hill neighborhood. Writing in the Wall Street Journal, Anton Troianovski notes that “Even the Western Hemisphere’s poorest country – Haiti – was gearing up to bid on a Second Avenue office condominium when the earthquake struck and derailed its plans.”
Foreign governments “are almost the only game in town,” according to Ken Krasnow, managing director with Massey Knakal. During the boom years, foreign governments looking to buy real estate for consulates and U.N. missions found stiff competition from private developers. Since last year, however, Senegal, Singapore, South Korea and the United Arab Emirates have purchased prime properties for redevelopment. Additionally, governments are paying top dollar – usually in cash – for office space or land sites that are within walking distance of the United Nations. Troianovski notes that “This trend underscores the bench strength of New York real estate: When certain buying groups move to the sidelines, others are waiting to take their place.”
Dealing with foreign governments means that the transaction typically progresses at a glacial pace. Philips International spent three years in negotiations with the Ivory Coast to close on an $8 million office condominium at 800 Second Avenue. The transaction, which closed last September, spent 377 days in escrow.