Increased Foreign Interest in Real Estate

Market optimism and positive real estate trends are attracting an increasing number of foreign investors seeking high-quality assets and strong yields.  According to both Real Capital Analytics Inc. and Bloomberg News, foreign investors spent nearly $8 billion on U.S. commercial properties, a 25 percent increase, within the first four months of this year.  This influx in international demand will continue to increase over the current decade. A recent report sponsored by the Mortgage Bankers Association’s Research Institute for Housing America concluded that foreign interest in American real estate will continue to rise, providing an important and growing source of new demand throughout the nation.

Consistent with national investment trends, foreign interest is permeating the local residential real estate industry.  International investors, particularly Chinese and other Asian buyers, are purchasing homes throughout the Greater Boston Area in rapidly increasing numbers. Payment methods dictate this recent trend.  While many local buyers are dependent on securing a loan, foreign investors frequently pay cash, allowing heightened latitude in bidding and more influence in closing a deal.  The increase in cash sales undermines the average high-end buyer’s ability to be competitive.

China’s dramatic economic growth over the past five years has generated a notable rise in foreign interest in local property.  According to a recent report by the Boston consulting firm Bain & Co., the population of wealthy Chinese – those able to invest at least $1.6 million – rose to nearly 700,000 by the end of 2012, doubling since 2008. With real estate prices dramatically increasing in many Chinese cities, homes in the Boston area are considered both an appealing bargain and worthwhile investment for affluent foreigners. 

Moreover, the high quality education, ideal location and rapidly improving economy have widely incentivized Boston real estate. Most international homebuyers seek newly built furnished properties. The majority of these purchases are intended to provide a home for children and wives while husbands travel internationally for occupational purposes. In many other cases, parents purchase a home or condo for a child enrolled in one of the prestigious colleges scattered throughout the region – buying, rather than renting a condo, often makes more financial sense for the foreign buyer.

Within Wellesley, foreign homebuyers have risen dramatically.  Boasting a reputable public education system, close proximity to Boston, community-oriented atmosphere, and virtually nonexistent crime rate, the Town of Wellesley offers an ideal location for international investment.  

When selling your home, it is pertinent to consider the interests of foreign buyers.  While staging a home for an open house, do not simply depersonalize, consider neutral styles and colors appealing to both local and international homebuyers.  In this evolving real estate market, bear in mind that online presence has become an integral part of today’s selling process – locally and internationally.  When selling a home, inundate online profiles with photos of your already staged home.  Finally, hiring a veteran real estate broker, well-versed in the international housing markets and trends will prove to be the most direct and effective way to reach all potential buyers.

While the influx of foreign homebuyers fosters a unique and increasingly competitive real estate climate, recognizing and preparing for this new international interest remains the key to a successful sales transaction.

Debi Benoit, principal of Benoit Mizner Simon & Co., has been Wellesley’s #1 real estate agent since 2006.  The Wall Street Journal twice ranked her among the top 100 real estate professionals in the country.  With offices in Wellesley and Weston, Benoit Mizner Simon & Co provides buyers and sellers in both markets with in-depth knowledge and experience combined with unparalleled client service.

With offices in Wellesley and Weston, Debi can be reached at 617-962-9292 or debi@benoitmiznersimon.com.