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Condo building on South Beach in Miami, Florida near South Pointe Park.
Despite tumult elsewhere, and a sharp drop in foreign purchases of U.S. real estate, Miami retains a steady appeal for foreign buyers.

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Will trade tensions scare away foreign real estate buyers?

Foreign property sales were down $43 billion from last year. Is it a possible sign of the “Trump effect”?

Riding out the rises and falls of the real estate market has become tougher as of late, with appreciation decelerating, sales slowing, and anxiety over a potential recession casting a pall on purchases. It’s a microcosm of what’s happening in the larger world market, where the U.S. imposition of tariffs and trade barriers with China and other countries has created similar uncertainty.

Those factors have cooled down the market for foreign buyers of U.S. property, according to a recent report from the National Association of Realtors, impacting potentially billions of dollars worth of real estate purchases. The group’s annual Profile of International Activity in U.S. Residential Real Estate report discovered a 36 percent drop in activity between April 2018 and March 2019. Foreigners purchased 83,100 properties, with a total value of about $77.9 billion, in that time period, down from 266,800 properties valued at $121 billion the year prior.

Report co-author Gay Cororaton says that shift is as much about consumer confidence as it is about international politics and economics.

“If you’re doing business in the U.S., and you see it as more stable and growing, then you purchase a house,” she says. “If you see lots of instability and uncertainty, you won’t purchase a house. I can’t give you a precise figure, but all this talk about trade will be negative, of course, when it comes to foreign buyers.”

A safe haven faces uncertain future

Foreign investors have long seen the United States, especially its expensive markets of New York City, Miami, and California, as a safe investment, a place to stash money and collect a healthy profit from consistent price appreciation. In markets such as New York, the flood of foreign money, which has placed upward pressure on real estate prices, has led to successful calls to rewrite financial disclosure rules and change the way the EB5 visa program, which provides a visa for investment, operates.

Foreign investment in U.S. real estate over time

Year Total properties purchased Total value of properties Value of Chinese investments
Year Total properties purchased Total value of properties Value of Chinese investments
2019 83,100 $77.9 billion $13.4 billion
2018 266,800 $121 billion $30.4 billion
2017 284,500 $153 billion $31.7 billion
2016 214,900 $102.6 billion $27.3 billion
2015 208,900 $103.9 billion $28.1 billion
2014 232,600 $92.2 billion $22 billion
2013 192.5 $68.2 billion $12.8 billion
This past year saw a sharp drop in foreign investment in U.S. real estate, especially from Chinese buyers. Data via National Association of Realtors. Years run April of the previous year to March.

Starting in November, investors will need to invest $900,000, up from $500,000, on developments in economically disadvantaged or targeted employment areas, a new, higher bar that officials believe will lead to less fraud and less of a focus on luxury projects. The new guidelines will redefine which areas can be part of EB-5 investment schemes, since past projects utilized urban areas that were already attracting investment and development (for instance, Hudson Yards was partially funded with the program).

But a new combination of short-term risks and long-term issues may have an even larger, more chilling effect on foreign money in U.S. real estate. The most important shift may be the imposition of capital controls by the Chinese government, which closely monitors and controls how much the country’s investors can sink into U.S real estate and has decreased approvals for foreign investment. Tighter investment limits⁠—for instance, Chinese citizens have to report any foreign purchase of more than 50,000 yuan (roughly $7,350) compared with 200,000 yuan (approximately $29,400) previously—and the shaky trade relationship with the U.S. have severely impacted Chinese investment. The NAR reported native Chinese investors purchased $13.4 billion worth of residential property, a 56 percent drop from the previous year, and commercial investment has sharply decreased for the last year.

“All these little factors add up,” says Cororaton. “The capital controls in China were a big factor, but once you factor in EB5 and all these toxic trade talks, the direction [of investment] will be negative. We’ve already seen a significant decline, as well as a significant decrease for next year at least.”

A screenshot of the homepage, with links representing New York, Boston, and California, and a bar showing the logos of well-known American universities., a specialized real estate portal for buying real estate for Chinese students studying in the U.S.

Chinese college students and Indian techies

Traditionally, stories on foreign real estate have focused on oligarchs and unseemly characters hiding money in high-rises, or Chinese buyers taking an ever-larger share of U.S. assets without necessarily planning to occupy their investments. But the reality of foreign real estate purchases can be much more utilitarian.

For example, a massive portion of the foreign investments in Florida are Canadian snowbirds looking for a winter retreat (one in five foreign buyers purchased in the Sunshine State). In Texas, the state with the third-largest influx of foreign buyers, purchasers are mostly Indian buyers looking for proximity to tech jobs and Mexican buyers seeking nearby investment potential.

A significant number of foreign buyers, 60 percent according to NAR figures, are simply students or workers living in the U.S. on a visa, which suggests that immigration and property purchases are closely interwoven.

“Buyers living in the U.S. and working on a visa make up a bigger chunk of the foreign buyer market than those buying from abroad,” says Cororaton. “That’s always lost somehow.”

Consider Chinese college students, 363,000 of whom studied in the U.S last year, according to the Institute of International Education, four times the number just a decade ago. Roughly 10 percent of property purchases by Chinese buyers are homes for students studying in the U.S. An entire network of specialized websites and property brokers exists to serve this niche market, including and Tumeibian, two sites that highlight high-end apartments and homes near Ivy League schools and other top-tier institutions.

But Carrie Law, CEO and director of, a Chinese-language search portal for U.S. real estate, told CNBC that “the Trump effect is undercutting some of the primary drivers of Chinese demand for U.S. property, including buying homes for students who are studying in the U.S. and the country’s reputation as a safe investment.”

This significant source of foreign investment could shrink further if Chinese students look elsewhere after the Chinese government cautioned potential students about studying in the U.S., warning of longer review times for visas and increased rejections from U.S. officials.

Cororaton also says the vast majority of Indian buyers, who accounted for $6.9 billion in purchases last year, were already living in the United States.Many of them work in the tech industry, she says, and with the Indian currency, the rupee, appreciating, they now have more buying power. If they purchase less U.S. real estate, it’s because of the country’s overall housing shortage rather than any change in international policy.

Miami’s still a magnet for buyers

Despite tumult elsewhere, Miami retains a steady appeal for foreign buyers. While purchases from countries such as Brazil, Argentina, and Venezuela, which fueled a boom in condo construction earlier in the decade, have fallen off due to economic instability and crises in those countries, Miami remains a magnet for foreign cash. And buyers from countries with stronger economies have risen to new prominence in the city’s real estate market—capital from Mexico, for instance, has flowed into the city after the election of left-leaning politician Andrés Manuel López Obrador.

“There will always be a lot of foreign buyers in this market,” says Lynda Fernandez, chief of communications and international for the Miami Association of Realtors. “Whether they want to get the money out of their country into a safe place, or they see a weak dollar and want to buy here, they view Miami and the U.S. as a sound, profitable investment.”

The Hudson Yards megadevelopment in Lower Manhattan.
Hudson Yards in New York City. Manhattan has been a favorite of foreign buyers.

How will trade tensions impact tomorrow’s buyer?

The biggest question for real estate agents who specialize in foreign buyers is whether this year was a temporary drop or a sign of things to come. Signals suggest next year will also be rough. Between the U.S. immigration debate, continued trade tensions that have already hindered global economic growth, and fears of a recession, U.S. real estate may be losing some of its luster.

Others see circumstances driving buyers in Beijing to the United States, especially after the Chinese government dropped its support of the renminbi (yuan).

“Many Chinese consumers feel we are entering a long-term period in which the Chinese currency will steadily devalue,” says executive chairman Georg Chmiel. “That’s a historic reversal. They want to invest overseas to protect their wealth from losing value. Most Chinese remain fixated on the US dollar as the prime alternative to the renminbi. Yes, the trade war has had an impact. But there is very little chance that Trump will cause Chinese investment to end. In fact, Chinese buyers are probably the most motivated of all international buyers. For many Chinese, US real estate is a necessity, not a luxury. They strongly desire to hedge protect their wealth by owning real estate in the world’s most developed economy.”

Cororaton says that in the coming year, she plans to keep her eye on how China’s economy performs, and whether the country relaxes capital controls. She says there may even be a bigger incentive for some buyers to look to Canada, despite the country’s strict controls on foreign investment, because Canada is more welcoming of immigrants.

She is wary of the trajectory of U.S. growth.

“The U.S. economy is still great in terms of job growth and employment, but if you look at second-quarter growth, it mostly came from personal consumption, not investment,” she says. “It’s steady, but growth has moderated. It’s not a big unknown factor; there’s a feel for where the trend is going.”

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