Financial instability and political uncertainty in their home countries have led many foreigners to regard the US property market as a safe haven for their investment. The amount invested in properties in the US between April last year and March this year is the second highest since 2009 with big interest from Chinese and British buyers.
The latest annual survey on purchases of US property by foreigners by the National Association of Realtors (NAR) confirms they see big investment opportunities in the US. The 2016 Profile of International Activity in US Real Estate is based on data collected from realtors from April 2015 to March this year. In total, foreign buyers spent US$102.6 billion on US property over the 12 months, a figure that is slightly below the previous survey but still represents the second highest since 2009.
In terms of actual homes, foreigners bought 214,885 properties in the US, 2.8 per cent more. And reflecting the buoyant state of the US property market, the average value rose from US$223,058 to US$277,380. According to NAR, this rise is in keeping with the general increase in property seen throughout the US where property prices went up by 6 per cent during the surveyed period.
Chinese buyers dominate US property market
As far as nationality goes, the Chinese take the lion’s share. They accounted for 14 per cent of all buyers and the amount they invested (US$27 billion) is three times higher than that spent by the next largest nationality group, the Canadians.
Canadians represented 12 per cent of total purchases, investing US$8.9 billion over the 12 months. Other dominant nationalities buying in the US property market were Indians (7 per cent), Mexicans (8 per cent) and the British whose 4 per cent share is higher than the previous survey.
Exchange rate variations
In the NAR analysis of the survey, their Chief Economist Lawrence Yun underlines the influence of the strong dollar on the US property market. He points out that Venezuelan and Mexican buyers have been particularly hard hit by the exchange rate. However, he emphasises that “the world view of American real estate as a safe investment should keep demand firm as pressures from a stronger dollar continue to weigh down on affordability”.
A strong dollar also has advantages for those who have already bought property in the US. The survey highlights reports from some realtors that many Canadians sold their US property to take advantage of the beneficial exchange rate.
Preferred locations to buy US property
Yet again, the Sunshine State is the preferred location for foreign investment with 22 per cent of buyers choosing property in Florida. California lies in second place with 15 per cent of the market share, followed by Texas with 10 per cent.
The Florida property market is a particular favourite among Canadian (37 per cent) and British buyers (39 per cent). The Chinese tend to prefer California (32 per cent) due to the state’s proximity to Asia.
Preferred property type and use
The vast majority of foreign buyers opt for single family homes with 65 per cent of the total buying this type of property. All nationality groups with the exception of the Canadians showed an overwhelming preference for single family homes in suburban areas.
Given the perception of the US as a safe haven, it’s no surprise to discover that many foreigners look to the US property market for investment purposes. 18 per cent of those bought stated investment as their principal motive. 14 per cent bought a holiday home and 10 per cent said they planned to combine the property for both investment and holidays.
“These latest figures clearly show that foreigners continue to favour the US property market for investment,” commented Dies Poppeliers, Managing Director of the BRIC Group. “Not only does the US have strong appeal as a place to go on holiday and live, it also offers excellent opportunities.”
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)