WASHINGTON (TIP): Arun Kumar owns three apartments in New Delhi, where he has carved out a comfortable life as part of India’s rapidly expanding middle class. Not long ago, he also became a global landlord, picking up an inexpensive three-bedroom house and a duplex nearly 8,000 miles away, in St. Louis.
For Kumar and other affluent Indians, US real estate is a security blanket. Faced with what some have considered a bubble in real estate prices in major Indian cities and a sometimes jittery Bombay Stock Exchange, they are joining a wave of buyers from other countries who see the recovering US housing market as one of the best places to put their money these days.
The wealthy elite from China, Latin America and elsewhere have bought pieds-a-terre in glassy towers in Manhattan, luxury condos in Miami and homes along the West Coast. Law enforcement investigations have found that some foreign investors are using US real estate holdings, at least in part, to hide cash and other assets from authorities in their home country.
But many less-than-superrich foreign investors just want a safe place to put extra savings, and their investments tend to be much less grandiose than the trophy properties that have drawn most of the attention. And for Indians in particular, who long trusted in gold to protect their wealth, US real estate offers a “very, very attractive destination,” said Subir Gokarn, director of research at Brookings India in New Delhi.
Jed Kolko, chief economist at Trulia, an online marketplace for residential real estate, said the most popular property searches for people from India were in and around Silicon Valley, where technology firms heavily recruit from India; in the Boston and Philadelphia areas near universities that have numerous students from India; and in suburban areas of New Jersey and in Queens, where there are established Indian-American communities.In an echo of the late 1980s, foreign investment in US real estate has taken off again. A survey from the National Association of Realtors estimates that from April 2013 to March of this year, total sales to international clients were about $92.2 billion, a 35 percent increase over the previous 12 months. The figure includes purchases by recent immigrants. Foreign buyers now make up 7 per cent of total existing-home sales of $1.2 trillion, according to the survey. Of those, Indians represent 6 per cent of the purchases, spending $5.8 billion, up from $3.9 billion over the same period a year ago and on par with buyers from Britain. Canadians have long bought US property and still do so in big numbers, with purchases centered for the most part in Arizona, Florida and more recently in Las Vegas. Canada still accounts for the largest share of buyers, but China is the fastest-growing source of clients, according to the Realtors’ group.
And Chinese buyers are bigger spenders. Their real estate purchases in the United States nearly doubled from last April to last March, increasing to $22 billion from the previous period. They accounted for nearly a quarter of all international sales in the current period.
“Most people who can come here, they are pretty wealthy,” said Grace Tian, a broker with Realty Mark Associates in Philadelphia who often works with Chinese clients. In contrast, buyers from India are a more eclectic group. These include parents living in India who buy apartments for students attending college, making sure the units have concierge service and an extra bedroom so they can visit for extended periods, several real estate agents said. After the students leave college, the parents often keep the apartment and rent it out.