(WASHINGTON, DC) - As real estate markets across the world become increasingly globalized, Realtors® and their counterparts in other countries are poised to help international consumers take advantage of homeownership and real estate investment opportunities in the U.S. and abroad.
"Realtors® are a trusted source of real estate information, and our profession is increasingly crossing borders," said National Association of Realtors® President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. "The world's economy is in the midst of a massive wave of globalization, and real estate is no exception. The current economic slowdown is likely to be followed by new international growth opportunities."
Despite the recent strengthening in the dollar, many foreign currencies are still relatively stronger than they were 10 years ago. U.S. homes are, therefore, more affordable than they were a decade ago for buyers from countries like the United Kingdom, Brazil and many European nations. NAR Chief Economist Lawrence Yun estimates that the level of foreign buyers purchasing U.S. homes might double from the present level of 3 percent of all U.S. home purchases to as much as 6 percent over the next decade.
"American real estate is still relatively cheap for many international buyers," said Yun. "When newly affluent international consumers think about how to spend their wealth, they know that owning a home in the United States remains a powerful success symbol around the world."
To help Realtors® gain insights for their clients into this dynamic international environment, NAR is developing a Web-based media library devoted to international real estate that will be launched in 2009. The library will include information gleaned from leading real estate experts in countries all over the world.
For example, the economies of Brazil, Russia, India and China account for about one-quarter of the world gross domestic product and are generating about 80 million new middle-class consumers every year. Many of these newly affluent consumers will constitute an important new customer base of buyers for U.S. real estate in the years to come.
International real estate purchases will also be driven by the aging of the baby boomer generation. "As the baby boomers begin to seek retirement homes, the more affluent among them will look to purchase in the American Sunbelt. They will be joined by similar boomers from Europe and other countries, including Russia," Yun said.
Hugo Moguel, a broker in Belize City and president of the Association of Real Estate Brokers of Belize, sees a similar trend in his country. "Belize is attracting new investors from regions including Europe, Asia and even Russia," Moguel said. Belize offers good opportunities for foreign investors, especially as the country begins to develop entities similar to real estate investment trusts (REITs), which will attract investors from overseas.
Real estate experts from other countries have also shared their own market insights with NAR. In Canada, the market remains fairly solid, according to Alan Tennant, 2006 president of the Canadian Real Estate Association. Recent appreciation of the Canadian dollar has also helped some Canadian investors who are interested in investing in the U.S.
Peter Bolton King
In the United Kingdom, the situation is quite different, according to Peter Bolton King, chief executive officer of the National Association of Estate Agents. A major financial and banking crisis earlier in 2008, coupled with deterioration of public confidence in the economy and excessive over-marketing of real estate for the last several years have depressed the market there.
In India, the price of raw land in the high-tech corridor of Bangalore has risen from $0.32 per square foot to more than $5,000 per square foot in the past three decades in response to demand related to globalization, especially from American firms, but the market has recently declined. "Many people who invested in Indian real estate over the past five years have seen their capital grow more than 10 times, so a recent downturn of about 15 percent is acceptable," said Farook Mahmood, president of the National Association of Realtors® of India.
"In an increasingly interconnected world, it is vital for our members to think globally," said McMillan. "As an industry innovator, NAR will continue to deliver insights and information to our members for the benefit of the international real estate community."