Real estate brokers brace for ‘influx’ of wealthy overseas buyers

Wealthy overseas property buyers 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 travel bans on about 33 countries for vaccinated visitors, easing restrictions that kept most foreign real estate buyers from entering the country to view and buy properties.

Shoppers 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 wealthy overseas – New York, Miami, Los Angeles – say they have a long list of visits planned in the coming weeks by buyers keen to invest in US real estate .

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

Mark Abrahamson | Bloomberg | Getty Images

“This represents another demand advantage that simply hasn’t existed for the past two years,” said Jonathan Miller, CEO of Miller Samuel. “This will be particularly beneficial for the high-end and luxury market.”

Sales data suggests the wave 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, suggesting strong pent-up demand as buyers were unable to view or view properties.

Trophy Assets

Along with the lifting of restrictions, overseas buyers have enjoyed massive wealth creation during the pandemic as asset prices and stock markets rise. Brimming with money, the world’s wealthy now seek trophies. Cities like New York, Los Angeles and Miami, which have always been hubs for the global wealthy, are still considered safe investments despite the ups and downs of the pandemic.

“Home purchases in New York are very attractive to these buyers because they can use them or rent them out,” said Scott Durkin, CEO of Douglas Elliman. “But they can also hang on to it. It becomes something they are proud of.”

Through its partnership with Knight Frank, the UK-based property giant that has listings and brokers around the world, Elliman is preparing for next week’s sales rush by matching potential overseas buyers with listings. in New York, Florida and the West Coast. A Knight Frank representative even moved to New York for a while to work as a “traffic cop” for the flow of potential deals from overseas.

“We expect a flood of buyers in all of our markets in the United States,” he said.

Brown Harris Stevens is launching a new partnership with an online European property 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 property consultancy with offices in Europe, Asia, Africa and the Middle East. Savills has also opened a new North American office at its London headquarters to facilitate customer flow.

The big question, especially in South Florida, is whether there are enough homes at the right price for foreign buyers. In Miami and Palm Beach, prices have soared during the pandemic and inventory is at historic lows, especially for single-family homes. While inventory in Manhattan is still relatively high at around 7,600 listings, upscale sales and demand have been strong. For the hottest penthouses and the largest new condos, pandemic discounts are giving way to bidding wars and quick sales.

Preferably new construction

Brokers say foreign buyers prefer new construction — whether it’s a newly built mansion in Beverly Hills or a never-lived-in condo in a new Manhattan high-rise. “New development and high-end properties will be the main beneficiaries of returning overseas buyers,” Miller said.

Traditionally, China has been the biggest 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 dollars, before the pandemic, Canada is close behind, with $9.5 billion in 2020. Mexico ranked third, followed by India and the United Kingdom

Brokers say the buyers expected in New York this month are mainly from Europe – particularly the UK and Germany. In Florida, brokers say Brazilians make up the largest share of returning foreign buyers. In Los Angeles, the Middle Eastern wealthy are said to 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 national 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 wealthy like to be near water.

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

Kristan F. Talley