The Foreign Nationals Market - P.R.O.U.D.

The Foreign Nationals Market

The Foreign Nationals market is a large one if its appetite for all manner of U.S. real estate is any indication of size.

Consider that foreigners spent $153 billion in 2017 on U.S. residential real estate, or approximately 285,000 properties; this represents 10% of all of the U.S.’s existing home sales in 2017. The majority of home purchases by foreigners were made in Florida, California, Texas, New Jersey and Arizona, by buyers from China, Canada, U.K., Mexico and India.

Consider, too, that 10% of these real-estate-craving foreigners spent over $1 million on their property, and that 44% of them paid in cash. It’s not surprising then that they also have an appetite for life insurance, something they have limited access to in their home countries.

A look at U.S. commercial real estate acquisitions by foreigners reveals 44% of all U.S. acquisitions were made by Chinese and Canadian investors, or $31.6 Billion. German investors came in 3rd in the ranking, spending $5.6 Billion on U.S. commercial property. Although these figures indicate a decrease over 2015, foreign investment remains elevated relative to historic trends.

Foreign Nationals are non-U.S. citizens who live outside of the U.S. (aka Non-Resident Aliens) but who own property, or who conduct a business or trade in the U.S. Resident Aliens, on the other hand, are non-citizens, as well, but reside in the U.S. and typically hold a green card or other visa, or who may be married to a U.S. citizen spouse.

So what does this all mean?

It means that Foreign Nationals continue to find large investments in U.S. commercial and residential property, businesses and U.S. denominated products– including life insurance– very appealing because of the security and stability America’s system of government and financial markets offer.

What many of them may not be aware of is that their investments in the U.S. may be subject to gift and/or estate taxes. To this end, life insurance can help.

4 Ways to Identify Foreigners Who May Need Your Help:

1. Check your book of business for clients who may have a spouse who is a non-citizen. Non-citizen spouses need specialized planning to minimize taxes and manage their money at the death of a citizen spouse.
2. Build a network of real estate agents and let them know that you have specialists who can work with foreign nationals and resident non-citizens as they plan for their property purchases.
3. Network with international attorneys and immigration specialists who are working with foreigners on business transactions or in obtaining skilled workers or investor visas.
4. Assess major businesses in your geographic region– especially those that focus on science, medicine, and technology—and build a service to help their foreign national or resident non-citizen.

NAR 2017 Profile of International Activity in U.S. Residential Real Estate. Go to: https://www.nar.realtor/newsroom/foreign-us-home-sales-dollar-volume-surges-49-percent-to-record-153-billion

Real Capital Analytics 2017, 4 quarters ending March 31, 2017

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