From Propy’s weekly webinar, Episode #7 is with Richard L. Jordan, SVP & Head of Global Markets for Douglas Elliman Real Estate, and Steven Lawson, Head of Asia Operations, Lennar International.
Richard L. Jordan, SVP & Head of Global Markets for Douglas Elliman Real Estate and Steven Lawson, Head of Asia Operations, Lennar International discuss international buying trends in the United States market during COVID and beyond.
What are you seeing in the international market?
Steven Lawson started working with Lennar in 2011 when the single-family home builder wanted to expand its global presence. Lawson was responsible for opening the China market for Lennar. At the start of the pandemic, he saw a “pause” on purchases coming out of China. He sensed that the Chinese buyers were in a “wait and see” mode, waiting to see if the US’s market collapsed or if pricing dropped. There is always the hope with international buyers of getting wholesale discounting, but that is not currently happening. The US market is remaining strong.
Richard Jordan agrees with Lawson. Initially, with the pandemic, Douglas Elliman also saw the foreign buyers taking a pause. Select markets are starting to open up again, and Jordan says they are expecting more money moving out of Seoul into the US due to the recent elections in Korea not being favorable for the ultra-high net worth clients. One of the factors that make the US market so attractive to international investors is the resiliency for price protection. The US markets don’t have severe swings in prices like you see in other parts of the world.
What is life like in China today?
Lawson reports that China is settling into a temporary new normal with more people going back to work, shopping, and eating out, but with extra precautions being taken. Everyone wears masks, and temperature screening happens when you enter buildings.
What are the key selling points for international investors?
Jordan indicates it is critical to look at what is happening in their own markets when working with global buyers. Even before COVID, we started to see global unrest: Brexit, protests in Hong Kong, trade wars between the US and China, etc. Wherever there is unrest, ultra-high net worth individuals will look to other markets.
One of the most important aspects of working with global buyers is to make sure property ownership is held in the correct way. To avoid the 60% inheritance tax, global buyers need to have a corporation or a trust to hold that property, according to Jordan.
Another key selling point for global buyers in the US is what Jordan refers to as stamp duty. These are up-front levels of taxation that the foreign buyer has to pay, above and beyond the purchase of the property. These taxes range from 15% (UK), 22% (Canada), to 30% (Hong Kong) – and yet in the US, it is 0%. An international buyer can negotiate on a home purchase exactly the same as a local buyer would do, with no additional fees levied.
Lawson agrees with this point. The US is a fully developed economy with a rapidly growing population. That is the strength of the US economy.
Education is a driving force
It’s important to understand that 50-60% of international buyers are actually purchasing for their children and their education. Jordan cites that the US has 8 of the top 10 Universities in the world, and many global buyers are purchasing homes near those universities.
Marketing tips for global buyers
Lawson stresses that you must deeply understand the culture that you’re marketing to. It’s not just understanding the language; you must be sensitive to the country itself.
Where are the strongest US markets?
Lawson said that international buyers don’t actually perceive the US as the United States of America, but rather the United States of California and New York. If you’re located in those markets, you have a definite advantage. But he is also seeing activity in Washington State, Las Vegas, the larger cities in Texas, much of Florida, Georgia, the Carolinas, and up the eastern seaboard.
Jordan says we’re in a great place right now, and you need to develop a positive narrative. Make sure you arm yourself with a great team and consider finding trusted agents in the overseas market you want to serve. Having someone on the ground for your client can help facilitate the process. Be transparent, and remain confident about the US market. The opportunity is right now.