Tornado Alley (PROG)

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Aussie property mogul buys up hundreds of New York homes

.. as property prices go up those who own may not mind, those who want to buy get left behind .. one elderly black lady i just saw on tv was
happy with the change in her area, she said, "it forces people to upgrade their homes" .. she was a sweet old thing and happily an owner ..

VIDEO

Australian Broadcasting Corporation
Broadcast: 04/12/2014
Reporter: Sashka Koloff

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Alan Dixon has amassed hundreds of New York properties making
his fund the biggest single investor in New York's family homes.
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Transcript

TONY JONES, PRESENTER: While foreigners have raised a few hackles buying up Australian real estate, an Australian deal-maker's incursion into an historic part of New York has also been dividing locals.

An investment fund headed by businessman Alan Dixon has amassed hundreds of properties in the New York area, making it the biggest single investor in family homes there.

While some people in the mainly African-American area have welcomed the venture, others worry that soaring property prices will change their neighbourhood forever.

Lateline's Sashka Koloff has the story from New York.

SASHKA KOLOFF, REPORTER: This is one of nearly 600 houses Alan Dixon's investment fund has brought in the New York region over the past three years. They paid $1 million for it.

So what would it fetch now on the market?

ALAN DIXON, INVESTOR: In the state we bought it, probably the million has probably gone to $1.5 million. We will be creating an end product that'll be closer to $3 million because we're going to do a fully-restored and renovated house. But the actual base house in the state it was is probably up 50 per cent in the two years that we've owned the house.

SASHKA KOLOFF: His fund of Australian investors has spent $610 million on residential property here.

Mostly, they buy historic houses in gentrifying neighbourhoods like Bedford-Stuyvesant in Brooklyn.

ALAN DIXON: It is one of our more emerging areas. So, rather than perhaps being already established as a really desirable place to live, it's trending. Probably in Sydney terms, it's more of a Redfern than a Double Bay.

SASHKA KOLOFF: Many houses have been abandoned or are rundown. The idea is to buy them cheap, renovate and turn them into luxury homes which command top dollar on the rental market. It's a strategy that's made his company the biggest investor in single family homes in New York.

ALAN DIXON: So we think that our timing of starting in June, 2011 was pretty much perfect.

SASHKA KOLOFF: The fund stunned start buying houses here after the Global Financial Crisis when property prices in the US had bottomed out and the Australian dollar was at historic highs. With it now weakening, they're banking on even higher returns.

ALAN DIXON: We've already seen things like easing in the iron ore prices and so forth that would suggest an Australian dollar perhaps closer to 75 cents, which will provide some further gains for investors.

SASHKA KOLOFF: There are no auctions here. [in Sydney most all homes are sold by auction] Homes have a sale price and Alan Dixon offers all cash for them. It's a strategy would-be home owners say is pushing up prices and they just can't compete.

VICTORIA HAGMAN, REAL ESTATE BROKER: Anybody that comes in with a large amount of money to a community and is able to do what he's doing, definitely has the community pigeonholed in a place that is not comfortable for people that don't have the sort of access to money and resources that he does. So it leaves him in a position of power and us not in a position to do much about it right now.

ALAN DIXON: Property prices are going up in Australia, the UK, the US, so, we're just a small part of that market and our investors are looking for good options. So, unfortunately, it may get harder and harder for regular people to buy houses. ...

... And you can see the sort of classic brownstone continues all the way down these streets. We are now well into the fall, or the autumn, and we've lost all the beautiful leaves, but you can imagine in the spring and the summer, the canopy that's created by these well-established trees with the beautiful brownstones either side. It's a very classic New York streetscape.

SASHKA KOLOFF: There's no doubting the attraction of Bedford-Stuyvesant. Built in the late 1800s, it's perhaps the largest intact Victorian neighbourhood in all of America. Its brownstone houses underpin Brooklyn's identity. But until recently, it was considered a no-go zone and one of the most dangerous areas of the city.

MORGAN MUNSEY, REAL ESTATE AGENT: People think that it's some kind of, like, Beirut or something happening here and it's not really. It's all, like, a lot of media hype and people fall for it and they've been really brainwashed to believe, you know, it's a bad neighbourhood. I think the people who don't have problems are foreigners who are buying in the neighbourhood. Foreigners usually don't have issues, like ,American issues of, like, slavery and all this kind of segregation stuff, so, they don't have - actually, living in Bed-Stuy's almost cool for them.

SASHKA KOLOFF: A predominantly black neighbourhood, Bed-Stuy, as it's known, is changing. In just a few decades, it's gone from being 95 per cent African-American to about 60 per cent and some long-time residents hold investors like Alan Dixon responsible for pushing prices up and people out.

James McDougall has lived here all his life. His brownstone has been in his family for four generations.

JAMES MCDOUGALL, RESIDENT: This is a very historical church. It has been the centre of activism in Bedford-Stuyvesant - I can say Brooklyn.

SASHKA KOLOFF: An active member of Bed-Stuy's Bethany Baptist Church, where civil rights leader Al Sharpton was baptised, James sees investors as a dangerous incursion into his community.

JAMES MCDOUGALL: Coming into a neighbourhood and charging prices that are not affordable by most people, I think that's morally wrong. ... I think any time it comes to money, it has to be a racial thing.

ALAN DIXON: We're doing high-quality renovations that attract higher rents, but there's absolutely no colour prejudice as to the tenants that we get and certainly we would hope that that was never something we were perceived to be part of.

SASHKA KOLOFF: For others, like Mrs Butler, who bought her house for $18,000 in the late 1960s, the changes she sees are welcome.

MRS BUTLER, RESIDENT: I like it because it's making everybody upgrade their homes and keeping the area better, you know. And it's just encouraging for my daughter, in other words, not wanting to move out.

SASHKA KOLOFF: As the property market continues to squeeze more people out of Manhattan and into other burrows, Alan Dixon's plan is likely to pay off.

Do you think he's going to make a lot of money from these investments?

MORGAN MUNSEY: Oh, for sure. Yes, there's no doubt that Alan Dixon's going to make a tonne of money from investing in this neighbourhood. It might have ups and downs, but at the end of the day, he's going to be a very happy man and his grandkids will be too.

SASHKA KOLOFF: Sashka Koloff, Lateline.

http://www.abc.net.au/lateline/content/2014/s4142648.htm

See also:

Million-Dollar Homes in Sydney Highlights RBA’s Dilemma
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=108147254