The price of luxury real estate remains competitive in the US. The recession and the continued devaluation of the dollar have opened the door for international buyers to find high-end property at extraordinarily good value. Two of the hotbeds of investment opportunity are Manhattan and Miami.
According to the National Association of Realtors, international buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March.
A favorable exchange rate, political stability, and the high status of US property ownership have generated an influx of foreign investment in New York and Miami in particular. Manhattan draws foreign investors across the globe and is seen as, perhaps, the safest real estate investment one could make, as it continues to be the center of commerce and culture in the US and is a beacon to talentedpeople who aspire to greatness.
Miami on the other hand boasts favorable conditions for South American, Mexican and European investors, who seek a warm climate and cosmopolitan beach community. Waterfront properties in Miami are incredibly popular, and more affordable than luxury real estate in comparable parts of the world. Florida is also the destination of choice for Canadian ‘snowbirds’ – mainly retirees who fly south to the everglades for the winter. In fact, Florida has leapfrogged even California in destinations ofchoice, accounting for 26 percent of foreign purchases.
Canada remains the number one country for private, “overseas” investors. It accounts for 24 percent of all international sales, while China came second with 11 percent.
An interesting aside is that sixty-two percent of international purchases were made with cash, a number that has increased since 2007. This, and the high price of homes, demonstrates the wealth of these overseas investors who are already heavily invested in their own country’s property markets.
Foreign buyers are also being joined by wealthy Americans hoping to capitalize on the performance of the luxury real estate market on the east coast. Last week, casino magnate Steve Wynn bought a $70 million penthouse at 50 Central Park South. In addition, Extell, the developer of the ultra-luxury condo One 57 has seen high domestic demand for their extraordinary tower over looking Central Park. There are also reports that there are $130 million more domestic real estate deals of trophy properties are in the pipeline.
With confidence in the world economy on the wane, foreign investment in New York City and Miami (and other parts of the US to a lesser extent) continues to be a safe investment in uncertain times. In 20 years from now, it is guaranteed that New York City and the beaches of Miami will have withstood the test of time.
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