Wealthy real estate buyers from overseas are expected to descend on the country’s luxury housing markets on Monday, giving a second boost to demand for high-priced apartments and mansions.
The United States will lift the travel ban to about 33 countries for vaccinated visitors, easing restrictions that prevented most foreign real estate buyers from entering the country to view and buy properties.
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 wealthy overseas – New York, Miami, Los Angeles – say they have a long list of exhibitions planned in the coming weeks from buyers keen to invest in real estate. American.
A pedestrian stands in front of a Manhattan condominium building in New York City.
Mark Abramson | Bloomberg | Getty Images
âThis represents another demand advantage that simply didn’t exist over the past two years,â said Jonathan Miller, Miller Samuel CEO. “This will be particularly beneficial for the upscale and luxury market.”
Sales data suggests the wave of foreign buyers could generate tens of billions of dollars in additional sales. Foreign buyers spent $ 267 billion on US 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, suggesting strong pent-up demand as buyers were unable to visit or view properties.
Along with the lifting of restrictions, foreign buyers benefited from massive wealth creation during the pandemic with rising asset prices and stock markets. Stuck with cash, the world’s rich are now on the hunt for trophy assets. Cities like New York, Los Angeles and Miami, which have always been hubs for the world’s rich, are still viewed as safe investments despite the ups and downs of the pandemic.
âBuying homes in New York is very attractive to these buyers because they can use it or rent it,â said Scott Durkin, CEO of Douglas Elliman. “But they can also hang on to it. It becomes something they’re proud of.”
Through its partnership with Knight Frank, the UK-based real estate giant that has listings and brokers around the world, Elliman has prepared for next week’s sales rush by comparing potential buyers. overseas with listings in New York, Florida and the West Coast. A Knight Frank representative even moved to New York for a time to work as a “traffic cop” for the potential flow of business from overseas.
âWe expect a flood of buyers in all of our markets in the United States,â he said.
Brown Harris Stevens is launching a new partnership with a European online real estate and lifestyle marketplace, called 221 List, which will help buyers and sellers of the business. Corcoran announced in June a cooperation agreement between Corcoran and Savills, the London-based real estate consultancy with offices in Europe, Asia, Africa and the Middle East. Savills has also opened a new North American office at its headquarters in London to facilitate the flow of clients.
The big question, especially in South Florida, is whether there are enough homes at the right price for overseas buyers. In Miami and Palm Beach, prices have skyrocketed during the pandemic and inventories are at historically low levels, especially for single-family homes. While stocks in Manhattan are still relatively high, with around 7,600 listings, premium sales and demand have been strong. For the most desirable penthouses and larger new condominiums, pandemic discounts are giving way to bidding wars and quick sales.
Brokers say foreign buyers prefer new construction, whether it’s a newly built mansion in Beverly Hills or a never-lived condo in a new Manhattan skyscraper. âNew development and upscale properties will be the primary beneficiaries of the return of overseas buyers,â Miller said.
Traditionally, China has been the largest source of foreign buyers for the United States, but the Chinese government’s crackdown on capital and wealth flight was slowing the flow of money into American real estate even before the pandemic.
Chinese purchases of real estate in the United States totaled $ 32 billion in 2017, but fell to $ 11.5 billion in 2020. While China remained the largest source of foreign buyers in the United States , measured in dollar volume, before the pandemic, Canada is just behind, with $ 9.5 billion in 2020. Mexico ranks third, followed by India and the United Kingdom
Brokers say buyers expected in New York this month are mostly from Europe, particularly the UK and Germany. In Florida, brokers say Brazilians make up the largest share of returning foreign buyers. In Los Angeles, they say the rich in the Middle East make up the bulk of expected buyers for lavish mansions in Beverly Hills and Bel Air.
Before the pandemic, Florida was the largest market for foreign buyers, accounting for 20% of the country’s total. California ranked second with 16%, followed by Texas, Arizona, New Jersey and New York.
Brokers say that wherever they buy in the world, the rich like to be near water.
âCoastal cities will be the main beneficiaries,â Miller said.