Global Opportunities Come to the Heartland
Graham Wood | April 22, 2015
Secondary real estate markets are becoming the primary focus of international buyers as they branch out from large urban areas in search of homebuying opportunities elsewhere in the country.
During the Asian Real Estate Association of America's Global & Luxury Summit in Chicago this week, realtor.com® Chief Economist Jonathan Smoke presented the portal's latest data on the property-search activity of its users. The most popular cities searched among all users so far this year hit the usual suspects: New York, Los Angeles, Chicago, Miami, Atlanta, Houston, and Las Vegas. But when the data was filtered for the most popular searches originating from Asia, some surprising cities made the list: San Antonio, San Diego, Seattle, and Austin, Texas.
Unassuming states have also seen spikes in searches this year from particular Asian countries, according to realtor.com®. Alabama, Alaska, Georgia, Iowa, New Jersey, New Mexico, and Tennessee have gotten the most searches originating from South Korea. Missouri is the top target for searches from Taiwan. And Maine has attracted the most searches from Singapore. The rest of the country has seen spiking interest from Japan.
"Sometimes, these searches are tied to a college town where international buyers want to send their kids to school," Smoke said. "Sometimes, it's where a major factory is. Sometimes, it's just where the luxury properties are. ... South Korean searches, for example, are tied to where South Korean factories and investments are in the Southeast. So, it's tied to work implications."
Frank Malpica, director of product marketing and platform development for ERA Real Estate, said at the AREAA summit that today's luxury-buyer segment, which is heavily international, values experiences over possessions. They want a certain lifestyle more than a big house, and what they're discovering is that a unique living experience can be found in places all over the U.S.
"The new consumer has expanded their consideration set," Malpica said. "Opportunity markets have risen with these folks who value experiences over possessions. They want a home that reflects their lifestyle, and while that might cost $4 million in New York, it's $500,000 in Middle America."
The biggest lifestyle choice on foreign buyers' minds is education, said Elizabeth Harrington, North American publisher of the Hurun Report, a Shanghai-based business-to-business magazine aimed at China's high-net-worth individuals. Where they invest in real estate in America is largely dependent on where the best schools are for their children, she said.
That's one reason why the top city for international investment shifted from New York in 2013 to Los Angeles in 2014. "They're sending their kids to the U.S. as early as middle school to prepare for going to a university," Harrington said. "It's because of those cities' outstanding universities and secondary schools."
Foreign investors are also targeting areas that are ripe for development, which explains movement of foreign money into the center of the country. There's going to be an explosion of commercial and residential development in the next few years because of available land there, Harrington said. She added: "There's no land in New York."
Source: Realtor Magazine