Asian property buyers—many of whom are high-net-worth individuals purchasing second homes—want to enter the U.S. market, according to the Juwai IQI 2020 Top Countries Report.
Jumping from No. 4 in last year’s report, the United States is the most popular destination in the world for Asian buyers, who seek properties in “the traditional American gateway cities,” according to the report. The top five cities inquired about by Asian buyers were (from most to least inquiries) Seattle; Los Angeles; Orlando.; Irvine, California; and New York City.
The report identified four key reasons Asian buyers are interested in overseas properties. First, historically low interest rates and rising prices due to global financial stimulus were factors. According to Juwai, the spike in global property prices created FOMO (fear of missing out) among investment buyers seeking to capitalize on future gains. The pandemic also caused a significant number of buyers to postpone planned transactions.
Reevaluating Real Estate Priorities
Additionally, many Asian buyers found themselves reevaluating their real estate priorities in light of the COVID-19 pandemic. Push and pull factors were the third and fourth reasons the report identified, respectively. Push factors varied by country and “include restrictions on buyers in Tier 1 Chinese cities, a shortage of inventory and a lack of confidence in some local markets.” Pull factors affecting Asian buyer behavior include “the opportunity for bargain-hunting in hard-hit economies such as Thailand.”
The last decade has seen a dramatic increase in the number of high-net-worth (HNW) Asian buyers looking for second homes in the U.S. For example, in New York City, 23.8% of HNW second homeowners are from greater China. Many Asian buyers who aren’t in the HNW category also seek second homes in the U.S. because of lower comparative prices and less congestion.
Exploring Smaller Cities
This desire for space has inspired Asian buyers to explore smaller cities, where investors predict property prices will continue to increase rapidly. Smaller U.S. cities are expected to see the biggest increase in property values, which is why several cities on the National Association of Realtors’ list of top prospective markets for 2021 are popular with buyers from Asia, according to the Juwai report.
While Asian buyers are much more concentrated in selected markets than are domestic buyers, they are much less so than a decade ago, according to the report. At that time, the key gateway cities such as New York and Los Angeles had a much firmer grip on Asian buyer activity. Currently, Asian buyers are spreading across the map in similar patterns as other global post-pandemic domestic buyers.