Foreign Buyers - good or bad?
Is it a good or bad thing when foreign buyers come to acquire properties in your country?
Well, it depends as lawyers usually say, as the answer definitely depends on which side of the equation you are: recent property owners and sellers and their agents on commission would say it is absolutely good as it expands the pool of their buyers and usually drives prices up, while local buyers would say it is no good at all as foreigners are their competitors in search for homes and drive prices up… Developers are happy and sometimes start new projects with just foreign buyers in mind…
Is it good or bad for the country's economy if foreign buyers make real estate purchases?
Cities and communities that have their local budgets created from the real estate taxes would say yes, it is good and sometimes even absolutely crucial, while some analysts foresee some bad consequences in the future… Some governments promote and even reward foreign investors in real estate of their countries, while some others build barriers for them or forbid the foreign buyers purchasing real estate outright…
There are pros and cons in this issue as in almost any other on earth, and there are various publications and opinions on this controversial topic all over the net.
Here are some of them:
---Daniel J Bollinger, Keller Williams, New York City (U.S.): Daniel J Bollinger and NYC LOVE foreign investors! Foreign investors are VERY good for NYC and for NYC real estate. I welcome everyone to NYC, it is the melting pot of the world thanks to foreign investment.
---Dan Barnabic, Market Watch (U.S.): "Foreign investors pose threat to residential real estate. Time for the U.S. to act on the influx of foreign money… Skyrocketing real estate prices in America's selected urban centers are likely the result of a foreign influx of cash, more particularly mainland Chinese money, which is now flooding major American cities in the billions of dollars... If this trend continues, foreigners will own over 35% of residential real estate in the U.S. over the next 10 years… It will, in due time, drive the prices of homes out of reach of middle-class Americans, rendering them unable to afford homes in their own country…"
---Editorial, Lamudi (Philippines): "Pros and Cons of Foreign Property Ownership in the Philippines… There has never been this strong interest in the Philippine property market, but despite this, the Philippines still does not allow foreign ownership of real property; foreigners, however, can purchase condo units as long as foreign ownership in a single project does not exceed 40 percent. This may seem counterintuitive, because more established property markets allow freehold foreign ownership of real estate to attract investment and create more wealth. Hence, it makes sense for the Philippines to follow suit. By doing the opposite, the Philippines may be thwarting its competitiveness."
---James Bellandi, Boston Agent Magazine (U.S.): "While foreign investment has saved cities like Miami from the housing crisis, thanks to cheap foreclosed properties, all it takes is something like the dollar strengthening to threaten to push all that money elsewhere, leaving cities with a foreign-funded bubble ready to burst… Other countries have lashed back at the substantial foreign investments. Australia has developed plans to impose a tax on foreign property buyers after Chinese investment in Australian real estate grew by 60 percent… The United Kingdom has also made similar changes to protect their own markets... A petition, which asked the Canadian government to protect its citizens from the byproducts of international investing, garnered 25,000 signatures (an update: foreigners have been banned from buying real estate in Canada temporary)."
---Nadia Ferrua, Bradley Real Estate (U.S.): "Of course foreign investors are good for the economy and for the area it drives the real estate market up. Paying high property taxes allow great improvements in the area. It allows developers to be interested to build more better homes; they also build more roads, more parks, plant more trees and make undeveloped areas beautiful. People who buy homes are getting the loans (paying interest to the banks...) and so on and so on... Everyone is busy and everything is progressing.
"Think of it this way: foreign buyers are investing millions of dollars in the US economy by buying real estate, they pay property taxes, they pay for insurance, they pay for maintenance, upkeep, and they pay title companies and the whole bunch of other services as a result of the real estate purchase. They also pay income taxes on received income from renting the homes. And when the time will come for them to sell, they will most likely pay taxes on capital gain! How could it be bad? No way. It is definitely a positive thing for the market, for the economy and future economic growth of the country."
---Cody Carmen, Adhi Schools (US): "At the end of the day there will always be people concerned about foreign outsiders buying their cities or driving up prices for the local population. Calls for higher taxes on foreign investment and other restrictions will never cease. But it is our position that barriers to the influx of foreign dollars into real estate markets is not a sound decision. Without foreign investment the last recession and housing market crash would have dragged on longer, harming the same people that investment controls would allegedly protect.
"Strong real estate markets do create affordability issues in some cases, but also the potential for job creation with new construction and the subsequent affected industries and buying power of employed workers... And foreign investment also generates tax revenue. While this may not be a benefit that many people think of, a strong real estate market does provide valuable tax revenues (with benefits such as funding public schools)...
"The U.S. real estate market is not completely dependent upon foreign investment, but it is significantly influenced by it (in some local markets much more than others). It is unlikely that this will change in an increasingly globalized economy."
For those of you who agree that the foreign buyers are good for your properties and countries and want to find them, here are the e-books to help: *How to Be the First on Foreign Google* and *How to Convert Foreign Internet Visitors into Real Estate Buyers* (click on the covers to go to Amazon).
More e-books on the topic of real estate sales to the foreign buyers are also available on Amazon.
Sincerely yours,
Olga Kellen,
English - Russian Translator,
Associate member of ATA,
American Translators Association