When it comes to foreign direct investments, Europeans, in addition to investing in EU-member countries, tend to choose also North America; however, most of the investors are attracted by the traditional partner country, the United States of America. In the last few years, starting from 2014, investments in the States have increased; what is even more important to highlight, is that the numbers continue to exceed the ones of the previous years. The United States alone accounts for about 40% of all EU member states’ outward stocks.
HOW MUCH DO EUROPEANS INVEST IN THE USA?
Looking at the US real estate market, between April 2016 and March 2017 foreign investors invested a total of $153 billion; this number represents an increase of 49% from 2016. It is a clear message, that even with stricter foreign government regulations and uncertainty on US immigration an international trade policy, international investors still consider the United States a safe and secure place to live, work and invest.
WHO INVESTS IN THE USA AND WHERE DO THEY INVEST?
According to the statistics, top investors in the US real estate are Chinese and Canadians, followed by British, German, French and Japanese investors. About 20% of international buyers in the US come from Europe, while this percentage in Florida increases to 27%. The top investment destinations are Florida, California and Texas. Many foreign investors seek areas based on the distance from their home countries, presence of relatives or a strong national communities, climate, and education opportunities. While, for instance, Chinese investors tend to invest more in California and New York; Mexicans choose Texas; Europeans are more likely to invest in Florida, which is the most popular destination for foreign investors, with 31% of all real estate purchases in the US.
WHY INVEST IN THE US?
Investing in the US real estate market has its advantages: it is an international market with attractive prices, a stable economy with optimal conditions for a high-yielding investment and a great investment opportunity for future capital gain. The country’s strong property rights also ensure the security of a US real estate investment.
Not to mention, that returns in the US are higher than at home. European real estate prices are growing and are not able to ensure a return of 6-11%; like the US real estate market can. Investing in another currency, such as the US-Dollar and a steadfast price growth make investment in the US real estate more attractive to foreigners.
FOR WHAT PURPOSE?
For many foreign buyers, who are seeking a better life, owning a home is an important milestone in achieving the “American dream”. On the other hand, for those, who purchase a property as an investment, high net yield and capital gain can be attractive. There are two types of international buyers: about half of the homebuyers are non-resident in the US, while the other half already owns an American property. Foreign buyers in general use their home in the US for the following reasons: as a primary residence, a residential rental, a vacation home, but many of them are using it as vacation and rental combined. NAR statistics show that, for instance, British buyers are more likely to buy for occasional use, which means that they are more likely to buy a property and not move into it. Whereas Chinese buyers are more likely to buy the properties for relocation.
Overall, international clients in the US represent an upscale, slowly growing market with the top destinations of Florida. However, investing in a foreign market has some very important requirements: a trustworthy partner that supports clients throughout the whole investment process, that has a sufficient knowledge about international real estate and a cultural awareness. OPISAS, thanks to its market experience gained over the years, its international partnerships and multinational staff, is able to provide clients the best investment opportunities in the United States and follow their investments throughout the whole process.
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