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Foreign investment into the US luxury residential real estate market has jumped to a new $7.48 billion high with Miami, Manhattan and Los Angeles as the key locations, says a new report.
In the 12 months to March 2017 non-resident foreign sales in the US for property priced over $1 million hit $7.48 billion, up 72 per cent from 2016. Of these transactions 44 per cent were all-cash purchases, says the report quoting data from the US National Association of Realtors.
The report, entitled "US Ultra Prime Real Estate", by Beauchamp Estates, in association with Leslie J Garfield & Co, focuses on Manhattan, Los Angeles and Miami with analysis by Dataloft, the market intelligence group.
The report uses local market intelligence provided by Manhattan headquartered Leslie J Garfield & Co and California based Trulia, with overseas enquiries/deals for the US from London based Beauchamp Estates. The report findings are supported by data from WealthX and the US National Association of Realtors.
The report reveals that for premium residential real estate priced above $2,700 per sq ft the key locations in the US for foreign buyers are Miami, New York and Los Angeles.
Gary Hersham, managing director at Beauchamp Estates, says: “Despite the vast geographical size of the United States, data from the NAR shows that almost 40 per cent of overseas buyer transactions are made in just three US locations – Miami/Florida (26 per cent), Los Angeles/California (9 per cent) and Manhattan (3 per cent) - and for ultra-prime property these three locations are the US destinations of choice for the world’s wealthy.”
Jed Garfield, President at Leslie J Garfield & Co, says: “Data from the NAR shows that just five overseas countries dominate investment into US residential real estate, accounting for 50 per cent of all transactions, they are Canada, the UK, China, Mexico and India.”
The new report reveals that the Miami property market is dominated (80 per cent) by international buyers and occupiers, with just 20 per cent of the market being attributed to domestic US buyers. The average price for luxury Miami residential property is now $2,749 per sq ft with overseas buyers typically buying a 13,107 sq ft luxury residence with the most popular addresses being Miami Beach, Palm Beach and North Bay Road. Island locations such as Fisher Island and Bay Point are popular with overseas buyers because of the privacy and security they provide the report adds.
The report highlights that the most sought-after ultra-prime homes in Miami are either gated or secure developments on the waterfront. With trends leading towards towers, such as Missoni Baia developed by real estate magnate Vladislav Doronin with his Miami-based firm, OKO Group, or private villas providing up to six bedrooms set on 0.83 acres of land, complete with a yacht mooring.
The key sources of overseas demand for luxury Miami real estate are from South American and Continental European buyers led by investors from Venezuela, Brazil and Columbia for the former and purchasers from France, Italy and Belgium for the latter.
Hersham says: “Miami is a leading hub for overseas buyers investing in US luxury real estate. Alongside the beach, restaurants/bars, leisure facilities and all year good weather, the city has become a leading financial and tech business hub. Around 95 per cent of ultra-prime real estate in Miami purchased is done via cash transactions. Miami is extremely popular with high-net-worth buyers from South America – Colombians, Brazilians and Argentinians – with other key overseas buyers being the British and investors from the Philippines.”
The report says that Manhattan is the next key hub for overseas purchasers buying US luxury residential real estate. For luxury Manhattan property, 27 per cent of buyers are from overseas, whilst 63 per cent are domestic. The overseas buyers are truly international with key groups being Chinese, British, French and German buyers.
Overseas buyers of luxury property in Manhattan will now pay an average of $3,618 per sq ft and typically purchase a 9,509 sq ft property – either a family townhouse to use as a New York home or a large lateral duplex or penthouse providing a pied-a-terre and also a base for children studying in Manhattan.
The top locations for overseas buyers in Manhattan are Upper East Side, Greenwich Village and Tribeca. The report reveals that the most sought after ultra-prime homes for the very wealthy are large six bedroom townhouses that typically provide 4,276 sq ft of outside space and are within the vicinity of Central Park.
Garfield comments: “Manhattan is a premier world-city and attracts overseas buyers from around the world. Over the last five years there has been significant investment in the Manhattan luxury real estate market from Asia, Europe and Canada. Prices for premium Manhattan homes have risen by close to 30 per cent since 2010 with price growth of over 3.5 per cent in 2016.”
The report reveals that Los Angeles is the third most popular US destination for overseas buyers with 20 per cent of the housing market now comprising overseas households, with the balance consisting of domestic residents.
Overseas buyers of luxury property in Los Angeles now pay an average of $2,901 per sq ft buying an 11,211 sq ft mansion or large house in Beverly Hills, Hollywood Hills West, Pacific Coast Highway or Malibu. The typical ultra-luxury Los Angeles property provides six bedrooms, has a separate staff wing and is set in 2.55 acres of private gardens. Key overseas buyer groups in Los Angeles are from the Middle East (Saudi Arabia, Qatar and Israel), China, the UK, France and Italy.
Hersham says: “In Los Angeles wealthy overseas buyers tend to purchase in gated communities and prefer mansions or family houses located on large plots. Our clients from Britain, France and Israel who make enquiries about Los Angeles tend to work in the film industry, the media, finance or tech sectors and their Los Angeles property serves as both a holiday home, business base and investment.”
The report highlights that up until 2026 an additional 22,000 ultra high-net-worth individuals are forecast to buy premium property in the US and reside there either full or part time. By 2026 the ultra high-net-worth population of Miami is set to grow by 40 per cent (up to 1,050 more wealthy households), Manhattan and Los Angeles are forecast to see wealthy household numbers rise by 30 per cent with up to 8,541 and 4,095 new wealthy households respectively establishing in the cities.
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