Indians step up investment in us real estate

Photo: Fifth World Art

International buying activity in the 12 months to March 2014 was driven by continued rising affluence in five major countries: China, Canada, Mexico, the United Kingdom and, in the middle of them all, India.

Those five countries accounted for 54 per cent of reported transactions, according to a recent study by the National Association of Realtors.

During the 12 month period, buyers from India purchased US properties estimated at $5.8 billion in total value, which is approximately 6 per cent of total international sales. The figure may not be very big, but it is far from a blip. Some Indian buyers are investing in the US as a safe haven in the face of what could be a bubble in Indian house prices, or as an alternative to India's traditional safety blanket, gold.

Others, though, are also buying for career or family reasons.

Jed Kolko, chief economist at Trulia, tells The New York Times that the "most popular property searches for people from India were in and around Silicon Valley, where technology firms heavily recruit from India".

Indeed, buyers from India are locating in urbanized areas and states that are home to IT companies such as California, New York, and North Carolina, says the NAR.

Approximately 46 percent of international clients bought properties worth up to $250,000. Buyers from China, India, and the United Kingdom purchased properties above the median price. This is because buyers from China and India tend to buy in states with higher property prices such as California, Washington, and New York.

The median price paid by Indian investors in the year to March was $342,857, while the mean price was $459,028. In contrast to other buyers, only 23 per cent were all cash sales. Indians mostly purchased single family detached homes, but about 6 percent bought for commercial/rental use. The properties were mostly in the suburban area and intended for residential and longer-term use.