Chinese, Indian and Russian buyers scouring the New York City hotel real estate market are as ubiquitous as bedbugs these days. And both have a tenacious presence that leaves me wondering how this phenomenon overtook us.
Of course, we are delighted that these foreigners have realized what a great investment is the New York City real estate market. We remember when Japan discovered Rockefeller Center and its environs, as well as many less familiar office buildings. Money is now being poured into our infrastructure with abandon again from Asia. Imbalance of the dollar is one thing. Ego-driven buyers are another.
Let's face it. Wouldn't you rather own a famous hotel in midtown rather than an office building in the garment district? Bragging rights at cocktail parties garner so much more awe-inspired looks and high-rise envy. Ask Donald Trump.
What is amazing to me as a real estate person is that there are still the "naysayers" who believe these hotel sales of lesser known and sometimes weirdly located properties are a "bad investment." Today I was told that the most recent statistics prove that there is overbulding in New York City. Occupancies in January and February 2011, I am told, were below 70% and hotels lost money. Imagine that!!!
My response to these numbers guys is, "Are you kidding me?" This was the most dreadful winter in my life, ever, since I began recording temperatures on my own Weather Channel. I, for one, did not venture outside my front door except to purchase provisions at Whole Foods. So, I do not expect tourists were planning to visit New York City to swan about in Central Park.
I have lived in New York City since 1975. Had I had foresight and money at that time, I would have bought a one bedroom apartment that was offered to me around the corner from Central Park on West 70th Street. It was a charming brownstone, with one bedroom, high ceilings, a built-in bookcase, a back garden access and a loft. Fireplace, of course. I did not have money for the deposit since these were lean days. My friend bought it for $72,000. Today, that same apartment would probably add a couple of more zeros and be done with it. Regrets, I have a few, in the words of Frank Sinatra. That is definitely one of them.
So, to all my colleagues who are predicting the overbuilding of the New York hotel real estate market and who feel it is "way overpriced" I say, "Look to the future." My colleague told me today that the J.P. Morgan Chase numbers guys are looking at those January/February occupancy rates as an ominous indicator of the future profitability of hotels. So, do the foreign investors not care? Are their numbers guys not analyzing the deals correctly? Of course they are. They just have lots of money to spend, which they need to get it out of their respective countries.
In fact, unless the Indian Power Plant melts down in the next few months, I believe we can safely bet on the insanity of these hotel sales continuing to rise at an ever more fevered pitch. There is virtually no hotel inventory left in New York City. We are now looking at converting office buildings to hotels, even in the garment district!
I think the bedbugs have it right, and they are going to remain entrenched in the expensive high rise apartments and newly bought hotels. They are equal opportunity critters, after all. I intend to follow their example and pledge my allegiance to this City, this Borough, this Island. For the sake of our budget deficit requiring new taxes and transfer fees to pull us New Yorkers out of a very deep financial hole, let us hope the Asians and Russians continue to have the same tenacity.
