Levels of foreign Investment in US property have reached a new high, according to a recent study. Foreign buyers spent more on real estate, bought more properties and increased their market share. Their preferences for location, however, remained the same and Florida featured as favourite investment spot for yet another year.
The annual Profile of International Activity in US Residential Real Estate, compiled by the National Association of Realtors (NAR), looks at purchases of property throughout the country by non-resident foreigners and new immigrants to the US between April 2016 and March 2017. This year’s report, released in mid-July, points to higher foreign investment in US property than ever.
More purchase volume than ever
In the year to March, foreign investment in US property totalled US$153 billion. This represents a hike of 49% on the previous year’s figures (US$102.6 billion). Furthermore, this year’s total ranks as the highest ever, well ahead of the previous record set in 2015 of US$103.9 billion.
Foreigners not only spent more on US property in the 12 months to March; they bought far more properties. In total, over 284,450 homes were purchased by non-residents, a giant leap of 32% on the previous year’s figures.
In terms of percentage of the market, foreign purchases accounted for 10% of the total, up from the 8% recorded in the last NAR Profile of International Activity. Analysts believe that foreign investment in US property is perceived as one of the safest options available on the international market.
“While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work and invest,” said Lawrence Yun, Chief Economist at the NAR.
Record prices for foreign investment in US property
The average price paid by a foreign investor for a property in the US was, according to the report, US$302,290. This figure is 9% higher than last year and this uptick probably reflects the rise in property prices generally across the country.
Around one-tenth of all purchases by foreign investors in the US were for properties priced in excess of US$1 million. 44% of international buyers paid for the property in cash.
Who buys US property
Chinese investors continue to be the biggest investors in US property. Their investment levels reached US$31.7 billion, a record for this nationality. In second place were the Canadians, who have returned in droves to the US market. In the year to March, they invested US$19 billion, also a record and over twice the amount in 2016. Analysts attribute the huge rise in Canadian investment to the good value of US property compared to some markets in Canada such as Vancouver and Toronto where prices have skyrocketed in recent years.
The UK, Mexico and India make up the remaining places in the top five foreign investors in US property. UK nationals spent a total of US$9.5 billion, closely followed by Mexico with US$9.3 billion.
Top spots for foreign investment
Although the amount of foreign investment in US property may have risen considerably, international buyers remain wedded to three specific parts of the US. Florida continues to feature as the absolute favourite with over one-fifth of buyers choosing to invest in the Sunshine State.
In second place are California and Texas, both with 12% of the market share, a full ten points below the 22% drawn to Florida. Chinese buyers overwhelmingly favour California while Florida comes out top for Canadians. Mexican buyers show a preference for Texas.
“Foreigners continue to be drawn to US property investment,” says Dies Poppeliers, Managing Director of BRIC Group. “And with its year-round sunshine, good-value property prices and buoyant rental market, Florida ticks all the boxes for the savvy investor.”
BRIC Group, an investment company specialising in global real estate opportunities, offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group is also developing The Coral resort, in Northeast Brazil, a luxury beachfront resort with land and villa investment opportunities. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.
(Source: National Association of Realtors)