Germany Investing in American Real Estate

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There’s been a persistent trend throughout the past two quarters of overseas investing bodies making strong moves towards American real estate. As I noted in a prior post, the newest sources of interest have come from Chinese buyers in particular, with both private investors and wealth funds allocating extra capital to commercial property in economically healthy metros.

However, it appears that certain European entities have recently set their eyes on American property as well. According to a recent Wall Street Journal report, German investors have become increasingly set on securing real estate holdings throughout the United States. However, contrary to the purchasing patterns of Chinese investors that emphasized commercial property, German buyers are much more focused on residential acquisitions.

As the Wall Street Journal story elaborates, the upsurge in German interest in American residential property has as much to do with the value growth outlook as it does with a secure alternative to Eurozone investments. Germany had the good fortune of remaining continental Europe’s economic stalwart throughout the recession, and was instrumental in bringing the Eurozone back from the recession. That being said, there’s widespread national apprehension that Germany’s local economy will lag along with the that of greater Europe. America’s economic independence, and the resilience of its hard assets like high-demand property, has made it a much more appealing alternative to shakier Eurozone-based investments.

So What’s the Takeaway?

As the Wall Street Journal outlines, German home investment still only represents a fraction of overseas purchases. Nevertheless, the diversified roster of countries seeking safe investment have in the United States bodes well on two levels. The first of which is that it injects a diversified source of capital into the American real estate market, a welcome boon that paves the way for price stabilization. The second major takeaway seems the emerging consensus from non-U.S. analysts that American real estate investments are exceptionally stable.

Despite concerns that market trends might portend a future bubble, America’s urban property in particular seems set for gradual value gains. As is the case with other major foreign buyers, Germany’s market focus seems centered on big cities, with the northeast and mid-Atlantic regions predictably popular. However, as the Wall Street Journal report notes, German buyers have taken an unexpected interest in property throughout the Fort Myers and Cape Coral regions in Florida. It seems particularly enterprising German buyers have begun purchasing and flipping houses throughout various regions along the East Coast, a pattern that America’s more lenient tax laws make particularly appealing.

Photo: propertysnaps

About Author

Harrison Stowe is a writer for NVR Inc., a prime developer of Baltimore new homes. Addressing a range of topics including investing, mortgages, and real estate, Stowe combines finance knowledge with additional experience working with Ryan Homes in the current real estate market.

6 Comments

  1. As you pointed out overseas investors are buying US properties, usually for cash, because of our stable markets and growth potential. The only problem I have is like the big Hedge companies, they pay top dollar, driving prices up. Great for sellers, bad for us smaller investors. The richer get richer syndrome.

    • Melodee Lucido on

      Thanks Harrison. Timely article!! My task this week is how to find the foreign investors that might be interested in properties I have in 4 different states.

      I talk to investors that have foreign buyers ( so they say) but the statement seems to fizzle when I ask what they like buying. Maybe these foreign investors are held close to the heart and a closely guarded secret lol.

      Jim, there will always be enough good deals out there and we don’t have to worry that these investors (foreign and hedgies) will take away our wealth. Lack and limitation thinking brings frustration and stagnation—-it’s a saying I put above my desk so I remember it everyday : >

  2. William of Orange County on

    The increase in German investors is quite noticeable here in Orange County, CA, and as a German-American, I welcome it. I’ve even decided to brush up on my German language skills.

  3. It makes sense. The more countries’ govt go after the wealth of its people through higher taxes, the more american real estate market looks great as a hedge. It also makes it easier to obtain Visa and visit, based upon business travel….Which is a really important aspect if you’re from a country where its difficult to obtain a Visa.

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