Foreign investment in U.S. real estate is on the rise for a number of reasons, the biggest of which is that wealth is growing faster overseas. When we look at the most affluent of buyers, we see that billionaire wealth growth has continued, following a brief 2015 plateau. Worldwide, billionaires’ total wealth grew by 17% in 2016, up from $5.1 trillion to $6 trillion, and for the first time, there are more billionaires in Asia than in the U.S. At the same time, the U.S. dollar is softening while the Euro and the Yuan grow stronger, and that doesn’t even take into account the impact of the new tax law on wealthy Americans.
In its final form, the new tax legislation allows interest to be deducted on mortgages up to $750,000 (previously the limit was $1 million), and it also put a $10,000 cap on the amount of state and local taxes that can be deducted from the federal return. Some experts predict that without the associated tax benefits, the wealthiest Americans may hold off on home purchases for the time being. However, these same regulations won’t apply to foreign investors. In fact, international buyers will actually benefit from overall lower housing prices.
Real estate professionals must be able to cater to this growing international client base, and the following best practices can help them do just that.
1. Identify the right international geographies for the market.
The softening dollar and new tax law will impact housing prices for buyers from Europe and Asia alike. For real estate professionals on the east coast in markets such as Hilton Head or Miami, buyers will largely come from Europe, whereas agents in markets like San Francisco or Seattle should be looking west toward Asia for their prospective clients.
It’s also important for real estate professionals to consider their local economy and the impact that international business has on their markets. For example, auto manufacturer BMW just celebrated 25 years in South Carolina and continues to grow its presence there, while Seattle’s technology boom is attracting Asian billionaires. In markets such as these, real estate professionals should focus marketing dollars on appealing to wealthy international executives who do business in Europe and/or Asia and the United States.
Courtesy of Forbes and credit to Anthony
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