Canada recently banned investments in residential property by non-Canadians for two years in a bid to cool the overheated housing market that has seen Canadian home values increase by 20 per cent by 2021. Meanwhile, Florida Governor Ron DeSantis wants to ban foreclosures. and farmland in his state by companies from China, an “enemy” nation.
Can you imagine such measures in New York City? Of course, you can’t, because our “world capital” status means that we can cheat as much as we can in the five boroughs, in terms of UK pounds, euros, Chinese renminbi, Japanese yen, Israeli shekels, Moroccan dirhams and Welcome to the Saudi Riyal.
Our great city remains, along with London, the strongest magnet in the world for investment from all sides. Most New Yorkers know this and are proud of it. Of course, there used to be sporadic outrage outside. For example, a new “housing tax” was introduced in 2019, partly in response to absentee foreign owners leaving entire residential towers empty.
But the political brains to keep foreign buyers away from New York will make no sense in our city of three million immigrants. Even in the relatively simple Canadian market — where, unlike Florida’s proposal, the new law has a dollars-and-cents logic — the restrictions only “kill economic opportunity” and “did nothing to solve the affordability problem in Vancouver.” Jim Costello, chief economist for investment research firm Morgan Stanley MSCI, told the Post.
But Canada and Florida’s actions, while not considered here, are wake-up calls to a heretical question: Can the Big Apple become TOO global, especially as its political and business institutions lose their juice and social fabric?
In fact, net foreign investment in New York City commercial property actually posted a $350 million deficit in the fourth quarter of 2022, according to MSCI. It may only be a small fraction of the total market capitalization, but any decline in global capital is worrisome.
Foreign wealth is built not only in our bricks and mortar, but also in our collective identity. It is part of our exceptionality from the rest of the country. Spalding Gray called Manhattan “an island off the coast of America” for nothing.
Overseas treasure is essential to the city’s treasure – and spirit. Seeing the Nigerian flag fluttering atop the government-owned mission tower on East 44th Street makes me excited to live in a place where the world gathers on a narrow island.
The office tower at the New York Post, 1211 Sixth Ave., is owned by a Canadian pension fund. Neighboring skyscrapers are owned or part of Japanese, Korean, Qatari and German entities – along with several nations we consider rivals.
Ambassadors from different countries such as Ireland, China, Nigeria, Brazil and Qatar have houses and condo apartments. Alibaba billionaire Joe Tsai, a citizen of Taiwan, Hong Kong and Canada, paid $157 million for a skyscraper at 220 Central Park South last year.
But there’s a catch: As foreign riches seep into our economy and culture, the city is stripped of the political, economic, and social pillars that define us — and our power. Without them, Gotham threatens to turn even more into an “open city” where criminals use vacant apartments to hide illegal gains from their governments — while our institutions and communities wither.
A powerful conflicted but collective effort produced recovery and innovation after 9/11. No such total energy has followed a pandemic. If anything, New Yorkers are more conflicted than ever—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 moving to warmer, lower-tax climates. Financial firms such as Goldman Sachs and Citadel are testing the waters with remote satellites.
The city’s real estate industry, long a force for civic improvement and neighborhood renewal despite widespread complaints, has lost much of its political influence. Dynastic real estate families, while still active, are being eclipsed by publicly traded giants, more concerned with shareholders and global expansion than local needs.
As a municipality, New York City, which has always been a creature of the state, is now a captive of the state’s abuse. Albany lawmakers even rolled back “progressive” laws designed to empower criminals and crack down on the police, eliminating the city’s longstanding authority to control the streets.
The irrational fear that New York City is headed for recession can make even me, an ardent New Yorker, lose patience with the reckless excesses of “foreign investors.” Outsiders, history tells us, always make the easiest targets in times of crisis.
I worry about the lack of clear ownership that allows iconic properties such as 23 Wall St., where JP Morgan was born – and is now owned by a Hong Kong-Angolan joint venture – to fall into disuse and neglect.
I cringe when foreign oligarchs, rubber magnates and tech moguls buy into those precious half-empty towers – hoarding them like toys, while legions of homeless New Yorkers suffer in the cold.
I deplore the reckless and utter negligence of the Chinese insurance companies that left an empty, unfinished mess after six years of Waldorf+Astoria “re-imagining” work.
But when I am ready to try on the “foreign” intervention, I also remember, that without an investment of about half a billion dollars by the Belgian DTH Capital and a loan from a Chinese bank, the local developer Rose Associates could do. 70 Pine Street is a vacant office building that has been converted into 600 rental apartments. Barclays Center might not exist without Russian billionaire Mikhail Prokhorov, who invested $200 million in the Brooklyn Nets.
We need them all. So while Justin Trudeau and DeSantis trade in economic xenophobia, let the foreign moneybags buy as many houses as they want here. And let us put our house in order before we close its doors to the world.