Jeff Hornberger

What Does the New Year Hold for Global Real Estate?

Jeff Hornbergerby Jeff Hornberger, Director, Global Alliances, National Association of REALTORS®

Happy New Year!  I am sure that December was a busy month wrapping up your business and celebrating the holidays. As a globally oriented real estate professional, surely you’ve kept up with the global news and headlines.

But have you connected the dots on what the news headlines mean for global real estate?  Lets look at a few of them.

1)      “U.S. to Restore Full Relations with Cuba”.  This is big news.  Just 90 miles from the United States is 3,570 miles of coastline in some of the most breathtaking coastline in the world.  And its all undeveloped!  That’s over double what nearby Florida has.  Imagine snowbirds driving to Key West and taking a ferry across to Cuba to brand new residential beachfront developments, and retirees spending winters there and taking advantage of the great health care system.  Lots of referral possibilities there!  The reality is that real estate changes will move much slower and not much will happen in 2015.  A recent article on real estate opportunities in Cuba remind us that internal reforms of its real estate system, including its title system, and financing laws need to take place to make it more attractive for foreign real estate investment. The possibilities are huge, but challenges and barriers remain.

2)      U.S. Dollar Will Achieve Parity With Euro by 2017.  The Euro has been sliding against the Dollar for some time now, and anyone who travels to Europe with Dollars will be feeling a bit better about expenses there.  The trend is expected to continue into 2017, according to Goldman Sachs (as written in the Wall Street Journal blog). What does this mean for global real estate? Real estate in the USA just became much more expensive for European buyers, and that villa in Italy or beach house in Spain will become a lot cheaper.  The U.S. Dollar will go a lot further overseas, and countries will see increased U.S. “outbound” investment.

3)      Oil prices and America’s #1 buyer of real estate.  The strength of the Canadian dollar and the price of oil move hand in hand, as proven in this article in the Financial Post. The slide of the “loonie” has been dramatic.  This means U.S. real estate has become much more expensive for Canadian buyers.  Will they be “dethroned” as the #1 buyer of U.S. real estate? NAR statistics lag global events a bit, but if the trend continues, Canadian buyers may slow quite a bit from your local market.

4)      One certainty: China.  One trend that appears to be unstoppable is China.  Every year, they move up the ladder in inbound real estate investment in the United States.  Even with the economic slowdown, Chinese buyers of U.S. real estate show no signs of slowing down.  In Obama’s November trip to China, an initiative was announced to relax Visa rules for China travelers.  They are coming in droves.  They spend the most in real estate, with average sales prices topping any other country.  And the trend is not slowing down.  Will they replace Canada as the #1 buyer of U.S. real estate?  Stay tuned!

2015 is off to a fast start, with lots of global headlines.  Read between the lines, and spot the trends, and you will see them play out as you work international real estate transactions, both inbound and outbound.

If you haven’t gotten your CIPS yet, now is the time to get it.  For those of you who have it, you can apply what you’ve learned.  See NAR’s global calendar for face-to-face networking opportunities with agents around the world, and connect with International REALTORS® and CIPS designees for referral business through the online directories.

What trends have you noticed? Are you seeing more international activity in your local markets, or clients looking to purchase outside your area? Let us know!

Happy New Year!

Jeff Hornberger, CIPS, RCE