The mortgage crisis and the ongoing weakening of the U.S. dollar contribute to the growing popularity of foreign investments in the real estate market of the United States.
Wealthy foreigners rush to snatch up apartments and houses in the USA. A Nepalese businessman has recently purchased a luxury apartment in Battery Park City, The Associated Press reports. The maker of expensive Panden Rota carpets and rugs said that he needed to spend more time in the USA to demonstrate and advertise his products.
Rich foreign citizens acquire houses and apartments in USA’s biggest cities like New York and Miami, and it is considered an absolutely normal trend. They make such purchases not only because of their business interests or for the sake of entertainment. They believe that it can be a very lucrative investment too. The National Association of Realtors said that every fifth realtor firm signed large deals with foreign investors last year.
The rapid weakening of the U.S. dollar against the euro and the British pound sterling considerably cheapens the cost of U.S. real estate for Europeans. Furthermore, the reduction of prices due to the mortgage crisis made them more attractive for other investors too.
At the same time, many older markets, especially European ones, have lost their investment appeal. Hamburg-based realtor firm Engel &Volkers Group said that prices on houses in London, Paris and in the south of France had grown by 100 percent. The firm plans to open 300 divisions in the USA against such a background. Until recently Engel &Volkers Group had only two offices in New York and one in Florida. In 2008 the company plans to open 30 divisions on the U.S. East Coast.
The Britons actively purchase apartments in Manhattan, spokespeople for New York Itzhaki Properties say. The growing interest in the U.S. real estate triggers the increase of demand in apartments and houses in previously unpopular districts and areas. French and Scandinavian purchasers start to evince their interest in the houses located in North Carolina’s Research Triangle (includes Durham, Raleigh and Chapel Hill). The interest in the real estate in Boston is based on the boom of biotechnological enterprises in the region. In addition, Boston’s venture funds attract employees from Germany, Switzerland and Ireland, who in their turn use the profitable currency rate to purchase real estate in the US of A.
Even foreign students of numerous colleges and universities in Boston also start to acquire apartments. The monthly rent for a one-bedroom apartment (up to $1,800) virtually equals mortgage payments for the same property.
Charlie Jefferson, a developer from Philadelphia, was surprised to work with students from the University of Pennsylvania who purchased two apartments in the neighborhood. “We’ve never had students before who have such money,” Jefferson said.
Wealthy nationals from South Korea and their interest in the real estate of Los Angeles help to revive the neglected neighborhoods in the city center. Investments in the U.S. real estate from South Korea increased greatly when the government of the country lifted restrictions on currency operations.
Const а ntine Valhouli from Bostons’ Hammersmith Group says that it is quite risky to count on real estate foreign investors. Both the interest in real estate and low-rating mortgage loans distort the housing problem in the USA, he says.
Translated by Dmitry Sudakov