Everyone knows that international buyers love United States real estate. Nearly 16% of all commercial real estate sales in the U.S. were from overseas in 2015, according to Jones Lang LaSalle.
Taking a look at the residential side of the real estate industry, the National Association of Realtors (NAR) reports that 4% of the existing home sales in the U.S. in 2015 were purchased by international buyers. The largest source of the sales came fromChina, purchasing $28.6 billion of U.S. real estate followed by Canada at $11.2 billion, India at $7.9 billion, Mexico at $4.9 billion and lastly the United Kingdom at $3.8 billion.
Foreign real estate investors know that purchasing U.S. real estate is a great place to benefit from the world's strongest economy, but what happens to an investors interest in U.S. real estate when their own country is affected by events that lead to economic uncertainty, terrorism, political issues etc.?
Moving your money to a more stable economy just makes sense and that's is what happens more often than not.
According to Ross Milroy, broker at Ross Milroy Realty in Miami, They all understand that diversifying in international real estate over a period of time is proven to show greater return on your investment in your real estate portfolio than if you put all your investments in, lets say, the Mexican peso.
Recent terrorism has driven many investors to look for stability here in the United States, not only for their investments but alsofor their families. In addition, there are also investors that are using U.S. properties as a "Swiss Bank account" to assure security for themselves.
All this terrorism has terribly affected a lot of people. I personally have seen more Germans, Austrians, French people and Italians in Miami in the last year than I have seen in 10 years, Milroy says.
Political issues can be tricky, they can either cause foreign investors to purchase real estate in the U.S. or it can in some cases make it difficult for foreign investors to move money out of their country.
In 2014, the United States issued sanctions against Russia for the country's actions toward Ukraine, and although those sanctions had absolutely nothing to do with real estate, it still affected many Russian's ability to invest in the U.S. real estate market.
According to Harmel Rayat, a Canada-based real estate investor and author of 'Winning With Commercial Real Estate', A lot of that money isnt necessarily coming for yield. That money is coming for other reasons political reasons. They just want to protect their assets, get the cash out of their local countries, Rayat says.
Many issues can affect the International U.S. real estate market, but in the end it typically remains a good, strong investment.