September 23, 2008

Foreign investors have invested in America largely through buying American corporate bonds and US Treasuries. ow these assets lose value when the US prints money or causes the dollar to drop. Our foreign investors realize that it makes its debt a little less burdensome and renders the foreigners' holdings less valuable.

If you owned a lot of dollars and thought that the US might be taking on inflationary actions, like printing money to cover all of our new obligations. What would you do. Well, you could sell, but if you sold a lot you might drive down the price because you own so much.

With the new crises unfolding,smart foreign investors will hedge with hard assets - your homes and apartments look very good to them.

The number of overseas buyers has jumped. A study conducted last year by the Florida Association of Realtors and the National Association of Realtors found that 15 percent of the homes sold by almost 1,000 Florida agents in the past 12 months had been purchased by overseas buyers. Almost 60 percent of those buyers were Europeans taking advantage of the euro's continued strength against the dollar, up 33% since 2002.

Large Market Still Untapped

The number of agents certified as international specialists by the National Association of Realtors has grown to more than 2,000, a 30 percent increase in three years.

What Did They Buy

NAR has been looking into this for quite a while and here is what they have found. What did they buy? The NAR says that like domestic buyers, international clients prefer single-family detached homes or town homes, but they also showed a stronger preference for condominiums and apartments compared to home buyers in general.

Here Are The Numbers
  • Eighty-eight percent of existing home buyers bought detached homes, while 12 percent purchased multi-family housing (condos, co-ops, attached town homes, row homes, etc.) Seventy-eight percent of international homebuyers purchased in the multi-family category
  • Forty-seven percent of all international buyers purchased homes exclusively for vacation, while 22 percent were motivated primarily by investment.
  • Nearly a third of foreign buyers cited both vacation and investment as reasons for their purchase.
  • International homeowners spent an average of 4.2 months of the year in their U.S. property in 2006.
  • A third of all international buyers are from Europe,
  • Buyers from Asia and North America (outside the United States) each represent about one-fourth of the total market.
  • Sixteen percent of all international buyers are from Latin America. By individual country, most buyers come from Mexico (13 percent), the United Kingdom (12 percent) and Canada (11 percent).
The Survey Association of Foreign Investors in Real Estate

The Association of Foreign Investors in Real Estate (AFIRE) represents the interests of nearly 200 investing organizations from 21 different countries. AFIRE, a not-for-profit association of international real estate investors with headquarters in DC. I dont know this organization, it seems that the membership is largely institutional and investment property orientated.

Top Five Global Cities for Foreign Dollars
1. New York; up from #2 in 2006
2. Washington, DC; up from #4 in 2006
2. London; down from #1 in 2006
4. Paris; down from #3 in 2006
5. Shanghai; up from #9 in 2006

Top U.S. Property Types
Within the U.S. property market, the most dramatic change was a total reversal of investors’ preferred U.S. property types, with every property category shifting and, most dramatically, office properties falling into fifth place and retail properties rising to first.
1. Retail – from 5th place in 2006
2. Hotels – from 3rd place in 2006
3. Industrial – from 4th place in 2006
4. Multi-family – from 2nd place in 2006
5. Office – from 1st place in 2006

The Internet has been the key.
  1. Search the internet for sites that provide bi-lingual listing of properties for sale
  2. Find multi -lingual agents in your area. Often they will have a relationship to an agency that represents foreign buyers
  3. Try any of the largest agencies for their overseas listing partners.Log on to sites from other English speaking countries and find agents that represent buyers looking for US investment properties or vacation homes. Condos in the sun belt areas are preferred.
Thanks for Reading
Howard Bell
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