10 | INDUSTRY


NEWS By Geoff Hadwick


THE United States remains a favourite destination for overseas property buyers. International residential purchases there surged by $16 billion this year, one of the highest increases in recent years according to “The 2011 Profi le of International Home Buying Activity “from the National Association of Realtors. Total residential international sales


in the US for the past year ending in March 2011 was $82 billion versus $66 billion in 2010. And total international home sales in the USA last year were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing home sales in the US were $1.07 trillion. ‘The US has always been a desirable


place to own property and a profi table investment,” says NAR President Ron Phipps. “In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory.” “In addition to the advantageous


market conditions, realtors in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients,” Phipps adds.


America | remains incredibly popular for overseas visitors, who continue to buy


And NAR member agents are reporting a noticeable growth in the number of foreign families buying property for their children while they study in the USA, as well as an increase in the number foreign executives temporarily working in the country, some of whom prefer to buy rather than rent. “Besides the strength of the dollar and


the general economic trends in the US, international buyers are also recognising the benefi ts of home ownership in this country, especially in the case of recent immigrants,” says Phipps. “Many foreigners perceive


owning a home here as an important accomplishment in their efforts to become established in this country,” The overseas property buyers in the survey came from 70 different


countries versus 53 in 2010. For the fourth consecutive year, Canada was the biggest source of overseas buyers in the USA representing 23% of sales to foreigners. China was the second most popular


country, with 9% of international sales this year. Tied for third were Mexico, the UK and India. Argentina and Brazil combined


reported an increase in foreign sales with 5%, up from 2% in 2010. The top fi ve countries of origin accounted for 53% of international transactions in 2011. The average price paid by an


international buyer was $315,000 compared to the overall US average of $218,000. However, 45% of international purchases were under $200,000. The four states with the heaviest concentration of


www.opp.org.uk | JUNE 2011 $16bn rise in international purchases


overseas property buyers remain Florida at 31% of total international transactions followed by California at 12%, Texas at 9% and Arizona at 6%. This pecking order has remained the same for the past 5 years. Foreign buyers are primarily interested


in three factors when deciding where to buy in the US says the NAR report: · proximity to their home country; · convenience of air transportation; · climate and location. Generally, the east coast attracts


european buyers and the west coast remains popular with Asian investors. Mexican buyers are traditionally attracted to the south west and Florida is most popular among South Americans, Europeans and Canadians. 61% of foreign buyers bought a single family home while 36% bought a condo/ apartment or townhouse. In addition, 62% of international purchases were reported as cash, signifi cantly higher than all cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards. Financing challenges continue to be


a major hurdle for international buyers, with 32% reporting these as their reason for not buying a home. Many NAR members have reported that their foreign clients faced mortgage fi nancing issues, as well as problems with the country’s legal, tax and immigration rules.


East Germany offers limited but high returns


LEADING cities in East Germany are offering increasingly attractive returns, says the latest version of the Patrizia Residential Property Investment Compass Germany report released this month. West Germany’s cities “only have


a limited offering,” says the report, as prices reach new highs and stock is stretched by high demand. But, “if we look at indexed rent


increases, the potential for higher rents in Potsdam, Jena, Erfurt, Dresden, Weimar and Leipzig is at a high level ... one that is comparable with Western German cities over the past two years,” Dr. Marcus Cieleback, Head of Research with Patrizia Immobilien AG told OPP.


“However, rents in top locations in Western Germany are higher than in the East.” According to the report, “Munich


takes first place on the rental and purchase market with average rent of around €12.50 per sqm and an average purchase price of around €3,850 per sqm.” And “other top locations include Frankfurt am Main (rent €11.50 per sqm, purchase price € 2,900 per sqm), Hamburg (€ 11.50 per sqm, € 3,000 per sqm) and Düsseldorf (€ 10.50 per sqm, € 2,600 per sqm). Berlin (€ 8.50 per sqm, € 2,400 per sqm), holds a unique position as the link between Eastern and Western Germany.” However, in what


used to be East Germany, the cities of Dresden offer (€ 6.50 per sqm, € 1,850 per sqm), and Leipzig (€ 5.50 per sqm, € 1,600 per sqm) have recorded the highest rent and price increases in Germany. “It is clear to see that Berlin presents a


different picture compared to the indexed rental growth in Eastern and Western Germany,” says the company. “Although the states in Eastern and


Western Germany which have a large size compared to the number of inhabitants are recording steady increases in rent, rents in the capital have been rising sharply since the end of 2009. Berlin’s market for residential accommodation recorded the largest


increase in rent for new construction from Q1 2009 through to the last quarter of 2010 at more than 20%,” the report adds. And, “the risk of vacancies is not signifi cantly higher than in Western Germany in select Eastern German states,” adds Dr. Cieleback. “Demand for new accommodation will be high through to 2025.


Berlin: | in a unique position as rents rise


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