With foreign buyers flocking to places like San Francisco, Silicon Valley and Los Angeles to invest in U.S. real estate, the trend is beginning to have an impact on the housing industry – everything from increasing sales and prices to changing how developers design new homes and how brokerages market to off-shore investors.
According to the National Association of Realtors, U.S. home sales by international buyers grew an astounding 54 percent just in the past two years to $82.5 billion in 2012. Interestingly, foreign buyers spend almost twice as much on homes as domestic buyers. One of the fastest growing groups of foreign buyers has been Chinese investors, who now are second only to Canadian buyers when it comes to purchasing U.S. real estate. The percentage of Chinese investors has more than doubled since 2007 and now makes up 11 percent of all foreign buyers. Affluent Chinese residents are facing increasing limitations from their government on purchasing real estate as China battles inflation and what the government and many investors fear might be a real estate bubble. Properties in the U.S., even in more expensive Silicon Valley communities, are considered relatively cheap compared to escalating property values in China’s Guangdong Province, boasting 4 of the top 10 wealthiest cities in China, per a 2011 study.
A surprising amount of wealthy Chinese investors focused on America, and specifically focused on the best schools we provide. That combination of spiraling real estate prices and growing limitations by the Chinese government are prompting many well-heeled citizens to look overseas for places to invest and perhaps relocate. The trend has led to a rapid growth of Asian populations in Bay Area cities, such as Cupertino, where more than half of the residents are Asian, according to the U.S. Census Bureau. Given the increase in off-shore buyers – and their proclivity to buy more expensive properties – it’s no wonder that the real estate industry is taking notice.
A recent story in the Wall Street Journal reported that new home developers are trying to appeal to foreign buyers through the design of their properties. According to the Journal, new buildings and residences now have kitchens outfitted with wok burners to attract Asian buyers. Others have European-style bathtubs and bidets. South American-inspired residences include sprawling balconies that can accommodate large extended families for dining and playing games. Coldwell Banker continues to dominate the International Real Estate markets. Through our luxury Previews International program we have 741 international offices, nearly double the number of our nearest two competitors – Sotheby’s and Christie’s – combined! We have a significant corporate footprint in Asia, our largest presence of all of our international markets with the exception of Canada. Coldwell Banker Previews serves buyers with 168 offices in Asia, including China, Hong Kong, India, Indonesia, Japan, Singapore, Vietnam and Macao. It’s one reason why Asian buyers are often choosing to work with one of our agents. More than two years ago we launched a sweeping international marketing program focused on Chinese and other offshore investors looking to buy high-end homes in the Bay Area. We are marketing Coldwell Banker listings worldwide through a combination of print and online advertising, targeted direct marketing, and other outreach efforts. Given the challenges Asian buyers face in their own countries – and the view of the U.S. as a “safe haven” for offshore investors – I suspect the trend of international buyers purchasing Bay Area properties will only grow in the years ahead. And that’s good for the long-term health of our local real estate market.