Foreign Buyers Make up a Huge Portion in ... - Real Estate Japan

Inman News, a reliable national source of real estate intelligence, reports that 3.6 percent of properties sold on Oahu between May 2011 and January 2012 went to buyers with foreign tax bill addresses, making Honolulu one of the top ten real estate markets in the country for foreign buyers.

This piece of information is quite obvious, especially in Hawaii, where resorts and vacation homes and properties make up the largest portion of the international market. However, real estate experts say that if you analyze and look closely at the numbers, it?s more complex than what others perceive it to be.

Hawaii?s real estate does not offer bargains that foreign investors can find elsewhere. The Inman report adds that Hawaii does not have the high vacancy or foreclosure rates that depressed prices in states like Phoenix, Las Vegas and Florida. One of the top ten markets for international buyers in 2010, which was Cape Coral-Fort Myers, Florida, had a vacancy rate of 37%, the highest in the country. National figure is said to be about 13% and Hawaii is barely more than 8%.

The same irregularity was seen in the number of foreclosure sales in the Islands. During the 4th quarter of 2011 Miami?s foreclosure sales accounted for 24% of all residential sales. Phoenix had 39% while 58.7% of all homes sold in Las Vegas were foreclosures. However in Honolulu, it was only 6.1%. Also, Hawaii?s market has yet to yield bargain-basement prices so it?s just normal that foreign investors have focused on other places.

There is a huge mix of foreign buyers in Hawaii, and that?s part of the reason why its market is different from others. According to the National Association of Realtors, 23% of Canadians, English and other Europeans make up all international buyers across the country. In Florida, however, it?s a big percentage. Canadians make up more than 70% of its international market.

Asian buyers dominate the Hawaiian real estate market. Japan-based buyers account for more than 58% of all international sales in the state while Canadians make up 16% of foreign buyers. The Chinese also comprise almost 6% of all international sales, a group of foreign buyers that is divided into three?those from mainland, Taiwan and Hong Kong.

Patricia Choi of Choi Inernational says that it is the group from mainland China that had some realtors very eager to do business with China. With the country?s thriving economy, which has produced new millionaires, it is said that 85% of them would like to immigrate in the US, which obviously opens opportunities for real estate companies such as Choi?s.

Meanwhile, in Honolulu, broker and director of sales for Hualalai Realty, Rob Kildow shared that they currently have about 300 members/owners where 3.5% are based in Japan. They also have members from Canada, Hong Kong, Australia, Holland, Singapore and Korea. Overall, Kildow estimated 20% of his sales to foreign buyers. With the number of foreign buyers and international currencies coming in, these real estate professionals are well aware of their target clients? needs.

Kildow simply explained that all these have a lot to do with currency valuations: weak dollar makes them more attractive to international buyers. One good example is the yuan, which, over the past three years has been up 34% against the dollar, which amounts to a 34% discount on US real estate for Chinese buyers. The same goes with Japan, Korea and Canada.

He believes that flights in and out of foreign countries to Hawaii immediately mean addition to the increasing number of foreign buyers. However, there are still issues to work out on the part of these buyers. One issue is the difficulty in obtaining financing. China in particular, has a very strict currency regulation, which makes it difficult to get money out of the country. Pat Choi explains that Hong Kong and Taiwan have loosened up a little in this area. But foreign buyers from mainland China are restricted to $50,000 per person per year, which poses a problem for those wanting to buy real estate outside.

Choi believes that getting into the international market means a lot of work, particularly for realtors. She believes that knowledge is key to a smooth entry in the market. Young realtors, she says, should understand these types of issues and participate in NAR meetings to have a tight grasp of the international section and understand fully the needs of foreign buyers. She believes that traveling to foreign countries is one of the best ways to learn how these potential buyers move in their own environment. But the best advice she gave was patience; because success in any industry or in any business not only takes a lot of money and effort. It takes time and does not happen in a snap.

Original Article: HawaiiBusiness

Photo Credits: ConciergeAuctions via Flickr Creative Commons

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