For many affluent Indians, U.S. real estate is a security
blanket. Faced with what some have considered a bubble in real estate prices in
major Indian cities and a sometimes jittery Bombay Stock Exchange, they are
joining a wave of buyers from other countries who see the recovering U.S.
housing market as one of the best places to put their money these days.
The wealthy elite from China, Latin America and elsewhere have bought
pieds-à-terre in glassy towers in Manhattan, luxury condos in Miami and homes
along the West Coast. Law enforcement investigations have found that some
foreign investors are using U.S. real estate holdings, at least in part, to
hide cash and other assets from authorities in their home country.
But many less-than-superrich foreign investors just want a safe place to put
extra savings, and their investments tend to be much less grandiose than the
trophy properties that have drawn most of the attention. And for Indians in
particular, who long trusted in gold to protect their wealth, U.S. real estate
offers a very attractive destination.
Jed Kolko, chief economist at Trulia, an online marketplace for residential
real estate, said the most popular property searches for people from India were
in and around Silicon Valley, where technology firms heavily recruit from
India; in the Boston and Philadelphia areas near universities that have
numerous students from India; and in suburban areas of New Jersey and in
Queens, where there are established Indian-American communities.
In an echo of the late 1980s, foreign investment in U.S. real estate has taken
off again. A survey from the National Association of Realtors estimates that
from April 2013 to March of this year, total sales to international clients
were about $92.2 billion, a 35 percent increase over the previous 12 months.
The figure includes purchases by recent immigrants.
Foreign buyers now make up 7 percent of total existing-home sales of $1.2
trillion, according to the survey. Of those, Indians represent 6 percent of the
purchases, spending $5.8 billion, up from $3.9 billion over the same period a
year ago and on par with buyers from Britain.
Buyers from India are a more eclectic group. These include parents living in
India who buy apartments for students attending college, making sure the units
have concierge service and an extra bedroom so they can visit for extended
periods, several real estate agents said. After the students leave college, the
parents often keep the apartment and rent it out.
Irene Barnaby, a broker with Weichert Realtors in Jersey City, said her Indian
clients generally spent about $600,000 to $800,000 on condos. Some buyers pay
cash because traditional banks won't give them mortgages without a credit
history in the United States. But she has also created relationships with
smaller banks that will lend money to her clientele.
Some U.S.-based brokers are capitalizing on the growing interest from Indians. Indian
real estate agents are also getting in on the action. Vikram Somani, owner of
Property Hunters in Mumbai, has turned to the U.S. market, noting that title
insurance is available and the buying process is far more organized.
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