Real estate brokers prepare for a flood of wealthy overseas buyers

Wealthy buyers of overseas property are expected to enter national luxury housing markets on Monday, giving a second boost to demand for luxury apartments and mansions.

The US will lift travel bans to 33 countries for vaccinated visitors, easing restrictions that prevented most foreign property buyers from entering the country to view and buy property.

Buyers from Europe, China, Brazil and India will now be able to enter the United States for the first time in 20 months. Brokers in cities popular with the overseas wealthy – New York, Miami, Los Angeles – say they have a long list of tradeshows scheduled in the coming weeks from buyers looking forward to investing in U.S. real estate.

A pedestrian stands in front of a Manhattan condominium building in New York City.

Mark Abramson | Bloomberg | Getty Images

“This represents another upside in demand that has simply not existed in the past two years,” said Jonathan Miller, CEO of Miller Samuel. “This will be especially beneficial for the high-end and luxury goods market.”

Sales data show that a surge of overseas buyers could generate tens of billions of dollars in additional sales. Foreign buyers spent $ 267 billion on U.S. real estate in 2018 and $ 183 billion in 2019 before the pandemic, according to the National Association of Realtors. In 2021, their spending fell to $ 107 billion, indicating a lot of pent-up demand as buyers were unable to travel or visit properties.

Trophy assets

In addition to lifting the restrictions, overseas buyers have benefited from a huge accumulation of wealth during the pandemic with rising asset prices and stock markets. Wealthy people from all over the world are now looking for trophy assets. Cities such as New York, Los Angeles and Miami, which have always been hubs for wealthy people from around the world, are still considered safe investments despite the highs and lows of the pandemic.

“Buying a home in New York is very attractive to these buyers because they can use it or rent it out,” said Douglas Elliman CEO Scott Durkin. “But they can also hold on to it. It becomes something they are proud of. “

Thanks to a partnership with Knight Frank, a UK real estate giant with listings and brokers around the world, Elliman is gearing up for a surge in sales next week, comparing potential overseas buyers to listings in New York, Florida and the West Coast. The Knight Frank representative even moved to New York for a while to work as a “traffic cop” in connection with the potential flow of transactions from abroad.

“We expect an influx of buyers to all of our markets in the US,” he said.

Brown Harris Stevens is launching a new partnership with a European online real estate and lifestyle marketplace called 221 List to help the company’s buyers and sellers. In June, Corcoran announced a partnership agreement between Corcoran and Savills, a London-based real estate consultancy with offices in Europe, Asia, Africa and the Middle East. Savills also opened a new North American office at its London headquarters to help support customer flow.

The big question, especially in South Florida, is whether there are enough homes at the right price to buy from overseas. In Miami and Palm Beach, prices have skyrocketed during the pandemic, and stocks are at historic lows – especially for single-family homes. While stocks in Manhattan are still relatively high (around 7,600 listings), sales and demand remain strong. For the most expensive penthouses and the largest new condos, pandemic discounts are giving way to rate wars and quick sales.

New construction desirable

Brokers say overseas buyers are opting for new construction – whether it’s a newly built mansion in Beverly Hills or an unoccupied condominium in a new high-rise building in Manhattan. “New developments and higher-end properties will be the biggest beneficiaries of the return of foreign buyers,” Miller said.

Traditionally, China has been the largest source of overseas buyers for the United States, but the Chinese government’s tough capital flight and wealth measures have slowed the flow of money into US real estate even before the pandemic.

Chinese property purchases in the US in 2017 totaled $ 32 billion, but fell to $ 11.5 billion by 2020. While China remained the largest source of overseas buyers in the United States in terms of dollar volumes, Canada was in second place just behind the pandemic. $ 9.5 billion in 2020. Mexico came in third, followed by India and the United Kingdom.

Brokers say the buyers expected in New York this month will be mainly from Europe, especially the UK and Germany. In Florida, brokers say Brazilians make up the largest proportion of returning overseas buyers. In Los Angeles, the rich from the Middle East are said to be the bulk of the expected buyers of luxury mansions in Beverly Hills and Bel Air.

Prior to the pandemic, Florida was the largest market for overseas buyers, accounting for 20% of the country’s total sales. California is in second place with 16%, followed by Texas, Arizona, New Jersey and New York.

Brokers say that wherever they shop around the world, the rich love to be by the water.

“Coastal cities will be the main beneficiaries,” Miller said.

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