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WHEN A GROUP of Hong Kong-based Chinese investors bought control of the 58-acre Riverside South development site in Manhattan last month, they became just the latest example of the billions of investment dollars gushing from the booming British crown colony and spreading around the globe.
The Manhattan site had been controlled by lenders of Donald Trump, who was in default on the property. Though a press release proclaimed Trump to be "one of the first American businessmen to bring U.S. dollars home from an area of the world - Southeast Asia - that has been a focal point of American business activity and investment," Riverside South was not the first major investment by Hong Kong investors in Manhattan real estate, nor is it likely to be the last.
New York City in the mid-1990s is just the kind of market Hong Kong investors like. Experts say these investors are savvy bottom-fishers looking for distressed and out-of-favor investments that will turn around and produce big profits.
"There's only one reason ever for seeing Hong Kong dollars, and that is that they spot a major capital gain over the next four to five years," said Gordon Redding, director of the University of Hong Kong's busness school and author of a book on Chinese capitalism. "It is as simple as that."
The Riverside South site certainly qualifies as distressed. An abandoned railyard, the tract runs along the Hudson River from 59th to 72nd Streets on the Upper West Side of Manhattan and has lain unused for decades. The Hong Kong consortium took control by paying off about $100 million in Trump's bad bank debt and overdue taxes and reducing Trump's role to that of a minority owner and project co-manager.
The banks gave up trying to collect another $100 million owed, preferring just to get rid of the mortgage. At least one major U.S.-based investor had considered the deal, but backed away at the sight of other competing buildings already going up in the area and the cost of building a waterfront park promised to the city in return for permission to erect 5,700 apartments. The site is expected to be developed over six to 10 years at a cost of $2 billion to $3 billion and...