Overseas investors have been active in buying property in the U.S. especially in the last 2 years. In Manhattan, my first interview by the media on the topic was with the New York Times in Aug'2011 in the article A Second Home For Affluent Chinese. There has been numerous foreign investor articles since including Wall Street Journal's Foreigners Snap Up U.S. Properties and most recently AM New York's What International Buyers Want.
In my market, Manhattan, New York, overseas investors mainly come from the BRIC countries. Foreign investors buy in Manhattan because it's a safe place with stable returns and it's relatively inexpensive compared to top global cities. Many clients also buy in Manhattan to have a hub in the U.S. either as a vacation home or as a place for a child to live if the child is pursuing higher education in New York.
With regards to clients from Hong Kong and China, we see the trend being diversifying away from the bubbly property market in those regions.
An important feedback that many of my foreign investor clients mention is the quality of life in Manhattan and the culture this city (and America) represents. If America is the place where people of all walks of life are accepted with open arms, where creativity and risk taking is appreciated and where pursuit of ambition is encouraged, then Manhattan, being the U.S.'s financial capital, reflects those characteristics in multiples.
After visiting typical tourist spots like Wall Street and Times Square (although most of my clients have already been there and done that), clients mention the diversity of cultures here, how walking everywhere is so convenient, and even how inexpensive things are here compared to their home country. Yes, Manhattan is inexpensive. Google it if you don't believe me.
Maximizing returns is not always the goal. Like I tell clients, Manhattan will not be the place to maximize returns. To maximize returns, it's better to be in an emerging market where returns and associated risks are higher.
Think in the next interview, I'll mention the life aspect as a reason why overseas investors invest in the U.S. and in Manhattan. While we all tend to focus on facts and data, the soft reasons such as feeling comfortable and confident are equally important.
Wei Min Tan is Managing Director of Castle Avenue Partners and focuses on condominium property in Manhattan, New York.