Where the Smart Real Estate Money Is Going
Category News
As the global political and economic picture grows more uncertain, Ultra-High Net Worth Individuals (UHNWIs) are increasingly seeking to invest their millions in real estate in “safe haven” locations such as the US and the UK, as well as some promising emerging markets, including SA.
According to the Association of Foreign Investors in Real Estate (AFIRE), whose members have an estimated US$2 trillion or more in real estate assets under management globally, New York City is currently the top choice for foreign investors.
Second on the list is London, followed by San Francisco, Tokyo and Madrid.
And, as revealed in a recent survey by Johannesburg-based New World Wealth, Cape Town is not too far behind, as it now ranks 17th of among the world’s top second home buying destinations for global multi-millionaires.
According to the survey, about 2100 foreign multi-millionaires out of a total 495,000 around the world already own a second home in Cape Town. And perhaps it’s no wonder, since the city offers outstanding value for money, especially for those spending Euros, pounds or dollars. For US$1m, for example, investors can buy about 215sqm of luxury real estate, compared to 15sqm in Monaco, currently the most expensive luxury property location in the word. In London, US$1m will buy 25sqm, in New York it will pay for 40sqm and in Geneva and Tokyo, 35sqm and 76sqm respectively.
However, the AFIRE research shows that the US is still seen as the most stable and secure country for investment, outstripping second-place Germany by 55 percentage points, and third-place UK by 60 percentage points. Canada and Switzerland are fourth and fifth on this list.
As for the locations that global investors see as offering the best opportunities for capital appreciation, the US also tops that list, where it is followed by Spain, the UK, China and Brazil.
In the emerging market stakes, Brazil recently reclaimed its number one spot, bumping China into second place, followed by Mexico, Chile and Poland.
For real estate sellers, of course, it is also important to know where most of the investment money is coming from, so that they can target those potential buyers properly through estate agencies that are part of a truly global network, such as Leading Real Estate Companies of the World.
And at the moment, most wealth experts agree that the global charge into property is being led by Chinese UNWHIs, and that they are likely to dominate this market for the next few years.
According to the National Association of Realtors in the US, for example, Chinese buyers spent US$22 billion on American property last year, compared to US$12,8 billion the year before. Japan also seems to be increasingly popular with Chinese buyers, as is Australia, but Europe is rapidly gaining ground – perhaps because of the many “golden visa” schemes that offer citizenship to wealthy investors.
From a South African point of view, though, most wealthy foreigners looking to buy second homes are still being drawn from the UK and European countries like Germany, the Netherlands, and Russia, as well as other countries in Africa, such as Nigeria, Ghana and Kenya.
And on the other side of that coin, the UK and Australia still appear to be the top choices for wealthy South Africans looking to buy property abroad, although recent reports reveal that the US and those European countries offering “golden visas” are gaining ground
Author: Barry Davies