Economic conditions have Americans buying property overseas
A combination of factors at home, from low housing inventory and high prices to high mortgage rates and a strong dollar, joined forces to make buying property overseas an attractive option for high-net worth Americans. In fact, according to a Coldwell Banker survey, a whopping 92% of them actively looked into buying property overseas last year.
“We saw renewed interest among wealthy investors in international buying in 2022 in part because of built-up demand after not traveling for years,” said Michael Altneu, vice president of global luxury for Coldwell Banker Realty. “Plus U.S. economic conditions were more challenging in 2022, so investors looked for strength abroad and wanted to expand their borders.”
Interest from Americans has been building for years, but it has really exploded in the last 18 months or so. The number of high-net worth Americans buying property overseas last year was up 14% over 2021 and up 29% over 2019. Wealth creation during the pandemic and relaxed travel restrictions since have led to the surge, and it’s changed how builders and designers abroad operate.
“A developer in Germany always thinks: 50% foreigners, 50% locals,” Serkan Gocmen, international sales team lead at JLL in Berlin, told Mansion Global.
Americans are used to a lot of room, especially compared to European standards, and a lot of amenities. Those go on their list of demands when buying property overseas. For that reason, features such as open kitchens, home gyms, and concierge and security services have become commonplace in buildings trying to attract American buyers.
While they want modern interiors, they do want that Old World charm or local flavor exterior.
“Whenever Americans buy in London, they’re looking for something that’s quintessentially English,” Mark Pollack, co-founding director of Aston Chase, told Mansion Global. “They want to buy a piece of the history of London, as opposed to something they might be able to easily purchase in the U.S.”
The British pound has rebounded some since hitting all-time lows against the dollar during the brief premiership of Liz Truss, but it remains below its 2022 high point. After briefly hitting parity, the euro to dollar exchange rate remains favorable to Americans. According to HSBC expat explorer survey, 63% of Americans who moved abroad during the period of the most favorable exchange rates said they had more disposable income than before.
As of 2021, Newsweek reported, Americans had $35 trillion in foreign assets, up 40% from pre-pandemic levels. Two thirds of respondents in the Coldwell Banker survey who said they were looking at foreign properties already own at least one. The foreign investment trend has only grown in the last year-plus.
“We’ve seen widespread interest in buying almost everywhere, especially in France and Monaco, Italy, Costa Rica, Spain and Portugal,” Altneu told Mansion Global. “There’s immense interest in countries that offer a ‘golden passport’ that provides citizenship or a visa for both primary and secondary residences.”
Europe, Latin America, and Asia have been popular destinations for Americans buying property overseas the last few years. When they’re not using them, investors have taken to renting out those properties abroad to make some passive income.
Though upheaval in the domestic market has had Americans buying property overseas, international investors are still willing to take a chance on the U.S. market. A Coldwell Banker/Censuswide survey of 1,200 high-net worth consumers from 12 countries found that 80% of them consider U.S. real estate a safe investment and 76% rate the market as “excellent and/or good.”
“The appetite for owning U.S. real estate from overseas buyers has never been stronger, according to our survey,” Altneu said. “From investment opportunities to even being inspired by the entertainment industry and social media, buyers are confident in putting their money towards their dream of making the United States their home away from home. From coast to coast, there are plenty of reasons why wealthy buyers aspire to American living.”
Just as Americans look for amenities of home when buying property overseas, things like smart home technology, security systems, and sustainable design features attract foreign buyers to the U.S. And just like Americans, many of these international investors have had their interest piqued by TV shows and other media depicting life in another country.
Maybe the grass is always greener on the other side.