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Who Are The Dominant Foreign Buyers Of U.S. Real Estate in 2015?

System - Thursday, August 6, 2015
My good friend and accounting adviser, Rich Hart with Hart & Associates, recently sent out a update regarding who was buying Real Estate in the U.S.  While being involved in both the Las Vegas Real Estate market and Property Management business, I need to know how the trends are affecting both Las Vegas market and the US.  This is a good bit of information, and if you are looking for tax advice please feel to contact Mr. Hart at  www.Hartassociate.com or (888) 235-8263.
 For the past few years, Canada has been the go to country for buying U.S real estate.  As their temperatures are mainly on the frigid side (living in your refrigerator would be warm compared to some temps these folks endure), they prefer to purchase in hot climate states such as Nevada, Florida and Arizona.  Cities that have seen a lot of action recently are Fort Lauderdale, Miami, Orlando, Naples, Las Vegas, Mesa and Phoenix.  The intent of the purchase is not only to earn rental income now, but to eventually retire as snow birds later on. However, in 2015 we see a downtick in Canadian purchase activity due to a weakened Canadian dollar against the U.S. dollar.

In 2015, we see that the Chinese are now the new king of the hill.  They are not only buying more properties, they are also spending more than other international buyers too. Collectively, they have purchased 28.6 billion of U.S. Real Estate in the 12-month period ending in March compared to 11.2 billion purchased by Canadians.  They tend to focus more heavily on the west coast due to the ease of travel from China and Hong Kong, particularly eyeing cities such as Los Angeles, San Francisco and Seattle.  However, they are interested in investing in any location that provides great educational and business opportunities. With that said, you will note strong purchase activity in New York City and Houston as well.

The other three countries that are heavily investing in the USA in 2015 are India, Mexico and the United Kingdom. Together with Canada and China, these countries accounted for 51% of the foreign investment in the USA in the 12 month period ending March 2015.   Buyers from India purchase throughout the country, with no particular area of concentration, they just want a good deal.  Mexicans prefer to purchase close to the border in states such as Texas and California. U.K. citizens tend to focus on both vacation and work oriented areas such as New York, Los Angeles, Orlando and Kissimmee Florida, Houston Texas and San Francisco.

Foreign clients pay on average, about 500k per house (Chinese investors average 830k per house), and have purchased 104 billion in U.S. real estate during the 12 month period ending March 2015.  The following four states account for 50% of these sales: Florida, California, Texas and Arizona.

Why is there still an interest in U.S. Real estate?  Because many nations still feel that this country is the most stable on earth and are willing to park their money here.  As a property manager, you should figure out how to market to these investors so that you can get a piece of the foreign investment action.   For 2015, the top ten countries that are interested in investing in the United States are: United Arab Emirates, Switzerland, Hong Kong/China, France, Italy, U.K., Australia, Canada, Germany and Sweden.  Keep in mind that Germany, China and the U.K. each have more than 10,000 ultra-high net worth individuals.  If you want to make money, you have to follow the money.  As always, if you manage foreign properties, please contact us to make sure you are compliant with IRS FIRPTA laws, as the penalties are extreme for failure to do so.  We can also assist all of your foreign clients in obtaining US taxpayer Identification numbers and preparing their US nonresident tax returns.   

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