Qatari prime minister Sheik Hamad bin Jassim bin Jaber al-Thani may be the buyer of a $100 million penthouse in New York City, but the real estate market isn’t always friendly to foreign buyers.Before purchasing the penthouse, as the New York Post reported yesterday, al-Thani was reportedly turned away three times by co-op boards of other exclusive New York City apartment buildings.
After hearing about al-Thani’s trouble in the market, I spoke to real estate lawyer Edward Mermelstein of Rheem, Bell & Mermelstein about the obstacles foreign buyers face when purchasing property in New York City.
Apparently, co-ops—corporation-owned apartment buildings in which tenants own stock—are bad news if you are a foreign buyer.
Mermelstein’s firm has represented hundreds of foreign buyers looking for a pad in NYC. He told me co-op boards’ decisions on residents are completely subjective.
Basically, a board can deny anybody they don’t want as their neighbour.
“There is no reason (for denial) typically other than the people that make these decisions pick and choose who they want to live with,” Mermelstein said. “Most foreigners get scared away from even applying through co-ops.”
Mermelstein did say that over 50 per cent of NYC property is non-co-op, so foreign buyers tend to invest in property there, often purchasing condos—”real” properties that are purchased individually.
Buying real estate can also be complicated when a buyer purchases on partial or full credit, Mermelstein said. Luckily, most foreign buyers pay in all cash—a payment that streamlines the buying process.
With all the political and economic turmoil in Europe right now, the United States is an attractive destination for the foreign buyer. NYC is by far the number one real state market for buyers in America, followed by metro areas like Los Angeles, San Francisco and Miami.
“Between the political and economic instability, the United States is looking quite attractive (for buyers). We are the beneficiaries,” Mermelstein said.
One57, the condominium building where al-Thani supposedly purchased the penthouse, is especially appealing. Mermelstein said over 50 per cent of residents there are from a foreign country, because of amenities like housekeeping, laundry and dry cleaning services. One57’s staff is even multilingual.
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