The term international real estate describes a relatively new phenomenon, beginning in the 1980s and keeping pace with

globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...

. The term encompasses real property development, sales and leasing transactions across

national border Borders are usually defined as geographical boundaries, imposed either by features such as oceans and terrain, or by political entities such as governments, sovereign states, federated states, and other subnational entities. Political borders c ...

s. International

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...

could be viewed as one of the most dynamic branches of real estate although it is, by definition, influenced by fluctuating market value in various sectors between countries, as can be evidenced by the 2008 global credit crisis.

Types

International real estate is best subdivided into two categories: international

commercial real estate Commercial property, also called commercial real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. Commercial property includes office b ...

and international

residential real estate A residential area is a land used in which housing predominates, as opposed to industrial and commercial areas. Housing may vary significantly between, and through, residential areas. These include single-family housing, multi-family residen ...

. Some examples of international real estate transactions are: * a citizen of one country purchases a house in another country * a

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

headquartered in one country purchases or leases an office building in another country * a corporation or investment group in one country builds a hotel in another country

International commercial real estate

Most international commercial real estate transactions take place between corporations and may involve, lead to, or be a consequence of legal, design,

urban planning Urban planning, also known as town planning, city planning, regional planning, or rural planning, is a technical and political process that is focused on the development and design of land use and the built environment, including air, water, ...

, engineering, financing, and construction work. From a national government perspective, attracting foreign investment into

real estate development Real estate development, or property development, is a business process, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of developed land or parcels to other ...

projects can be a key priority for increasing country revenue and a key strategy for increasing the availability of national infrastructure and amenities. Some of the factors leading to the growth in the international commercial real estate sector are: * the post-war growth in

urban development Urban means "related to a city". In that sense, the term may refer to: * Urban area, geographical area distinct from rural areas * Urban culture, the culture of towns and cities Urban may also refer to: General * Urban (name), a list of peop ...

and infrastructure in both developed and developing nations;International real estate: an institutional approach By W. Seabrooke, Paul S. Kent, Hebe H. H. * business' evolution toward multi-national business operations; * the growth in

international investment International is an adjective (also used as a noun) meaning "between nations". International may also refer to: Music Albums * ''International'' (Kevin Michael album), 2011 * ''International'' (New Order album), 2002 * ''International'' (The T ...

practices enabling investors to look outside their own countries for above average performing investments.

The Institutions of Globalization

International capital market integration requires institutional help, both through the emergence of investment products catering to international investors, and through reliable information sources that make markets more transparent. The development of public equity and debt real estate market makes it much easier for investors to allocate significant amount of money outside their home market. The overall growth of the global property share market is helped by the proliferation of tax pass-through structures all over the world. The success of the U.S. REIT market has prompted regulators in many countries to introduce similar-but different named structures. REITs are an important development in the internationalization of property markets.

International residential real estate

Most international residential real estate transactions are generated by individuals purchasing lots or built units (including family homes, apartments, and condominium units). These purchases form the bulk of what is sometimes referred to as the vacation/second home market or residential tourism market. If a person wishes to initiate international real estate investment for the individual’s or the institution’s portfolio, the person or financial manager may consider multiple avenues. The indirect method of entering international real estate investment may involve passive investment in securities that are based on international real estate collateral or passive investment in international real estate service firms and offices. The direct method of entering international real estate investment may involve total acquisition or partial acquisition of the foreign property. For developed countries whose GDP per capita is above threshold level, it is calculate the value of institutional-grade real estate is 45% of national GDP, which is consistent with data gathered. However, to determine the size of institutional-grade real estate markets in developing countries adjustments are made because only the more affluent segments of the population in those countries have the wherewithal to use such real estate. Some of the factors leading to the growth in the international residential real estate sector are: * the rise in international

tourism Tourism is travel for pleasure or business; also the theory and practice of touring, the business of attracting, accommodating, and entertaining tourists, and the business of operating tours. The World Tourism Organization defines tourism mor ...

and travel; * the

baby boomer Baby boomers, often shortened to boomers, are the Western demographic cohort following the Silent Generation and preceding Generation X. The generation is often defined as people born from 1946 to 1964, during the mid-20th century baby boom. ...

generation reaching retirement age and looking for more flexible retirement options; * the increase in available information on the

World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web ...

regarding property listings in countries around the world.

Recent Increase in Chinese Real Estate Investing in the United States

A major increase in international real estate investing has been taking place between China and the United States. In the U.S., the Chinese are now the largest foreign buyers of homes, accounting for $28.6 billion of sales in the 12 months ended March 2015, according to the National Association of Realtors. There are three major reasons why Chinese are investing in the US real estate market: investment diversification, overseas education of their child and immigration. The Chinese real estate website Juwai.com, part of Juwai IQI, estimates that Chinese real estate holdings abroad totaled $80 billion in 2015 and are expected to balloon to $220 billion by 2020. Chinese investors are interested in commercial projects, residential properties, hotels, golf courses, clubs, land, industrial warehouses, office buildings, and shopping centers. Chinese investors initially were focused mostly on the major gateway cities such as

New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

San Francisco San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...

Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...

but are now moving into other cities as well.
“The Real Deal”, November 30, 2015.

References