Foreign Property Investments Stateside Hit Record High

Overseas investment into the US luxury real estate market has hit a new high, according to the latest market report U.S. Ultra Prime Real Estate. Findings - which include analysis by Dataloft and Trulia -  reviewed foreign investments for U.S. properties that were priced above $1 million. In the last 12 months, foreign sales have topped $7.48 billion, up 72% from the previous year. According to the National Association of Realtors, 44% were all-cash purchases.

Five overseas countries dominate the buyer pool, which accounts for 50% percent of all transactions - Canada, the UK, China, Mexico, and India.

Most interestingly perhaps, the report found that around 40% percent of foreign purchases above $2,700 per square foot were concentrated in three major hubs: Miami, Manhattan and LA. Miami Beach, North Bay Road, and Palm Beach ranked high among house hunters - but island destinations such as Fisher Island and Bay Point have also been sought-after down to the associated privacy and security. In Miami – waterfront homes are the primary draw, with buyers generally purchasing property over 13,000 square feet, with private pools and generous outdoor living space.

In LA, properties in coastal spots such as Malibu and along the Pacific Coast Highway, as well as established districts such as Beverley Hills and Hollywood Hills West have performed best, with average home sizes of 11,211 square feet. Typically homes purchased are in gated communities – detached and located on large plots.

As to Manhattan – properties close to Central Park are selling well with European buyers, and typically on the Upper East Side, Tribeca, and Greenwich Village with duplexes, penthouses, and townhouses most in demand.

Historically, foreign buyers have been attracted to property ownership in the US for a number of reasons. Property is generally less expensive than comparable foreign properties, homes are viewed as a secure investment, and the US market offers long-season rental opportunities and appreciation potential.

That’s especially true of South Florida – where presently softened prices, and developers and sellers willing to offer 10% to 20% price reductions and a lack of new construction, which is currently allowing oversupply to be absorbed, is enticing UK buyers to put down roots. New tax reforms planned could also mean huge savings for those considering relocating to this income tax-free state. One dynamic is overwhelmingly clear however. Increased sales velocity and a longer-term commitment to investment is appreciably different to the investor-driven buyer’s market of a few years’ back.