Australian property investor buys $610 million worth of property in New York
As recently reported by ABC News - Link to source article: Here
An Australian businessman’s investment fund has divided locals after amassing hundreds of properties and becoming the biggest single investor in family homes in the New York region.
Over the past three years, Alan Dixon’s fund has spent $610 million on residential property, buying nearly 600 houses and making his company the biggest investor in single family homes in New York.
“What we’ve been prepared to do is come in and invest in individual houses and there are not actually other groups that are doing that on this scale,” Mr Dixon said.
“We think our timing starting in June 2011 was pretty much perfect. The figures are now showing that the market has been improving since that time, and of course the Australian dollar has started to weaken against the US dollar.”
The fund started buying houses in the New York area after the global financial crisis, when property prices in the United States (US) had bottomed out and the Australian dollar was at historic highs. With it now weakening, Mr Dixon is banking on even higher returns.
“We’ve already seen things like an easing in the iron ore prices that would suggest an Australian dollar at perhaps closer to 75 US cents which will provide some further gains for investors,” he said.
Mr Dixon’s fund buys historic houses, many of them abandoned or rundown. They buy them cheap, renovate them, and turn them into luxury homes which command top dollar on the rental market.
The purchases are made entirely in cash, and real estate broker Victoria Hagman said Mr Dixon’s all-cash deals are driving up prices.
“What he’s doing definitely has the community pigeonholed in a place that is not comfortable for a lot of people who don’t have the sort of access to money and resources that he does,” Ms Hagman said.
“It leaves him in a position of power and us not in a position to do much about it right now.”
In the historic Brooklyn neighbourhood of Bedford Stuyvesant, Mr Dixon’s fund has bought 35 houses.
Characterised by its brownstone houses, Bedford Stuyvesant is a predominantly black neighbourhood, however, the demographics are changing.
A few decades ago it was 95 per cent African American, while that number has dropped to around 60 per cent.
Some long-time residents blame investors like Alan Dixon for pushing rental prices up and people out.
“Coming into a neighbourhood and charging prices that are not affordable by most people, I think that is morally wrong,” James McDougal, who lives in a brownstone his family has owned for four generations said.
Others like Mrs Butler who bought her home in Bedford Stuyvesant in 1968 for $18,000, welcome the changes.
“I like it because it’s making everybody upgrade their homes and keeping the area better, and it’s just encouraging for my daughter, in other words, not wanting to move out,” she said.
Mr Dixon said he expected some significant capital gains on the fund’s investment. Morgan Munsey, a local historian and real estate agent agreed.
“There’s no doubt Alan Dixon is going to make a tonne of money from investing in this neighbourhood,” Mr Munsey said.
“At the end of the day, he’s going to be a very happy man.”