According to an article found today in Barron’s Financial News, the market for high-end urban real estate in the United States is back on the rise. The article, entitled “High Style in the City” , states that unit sales in Manhattan, Miami, and San Francisco are up by as much as 50% since 2009 and that prices are up 15% or more from their 2008 lows.
The article attributes the rise in high-end urban real estate to an increase in the number of new foreign buyers that have recently entered the market. While wealthy Russians, Indians, and Europeans continue to have a strong presence in high-end real estate investing in the United States, a new group of foreign investors have recently entered the market. An expanding wealthy class from China is looking for new places to invest, as are Brazilians, who are currently enjoying a big currency benefit from the Real, which is up 35% against the dollar since January 2009. These new investors are choosing to invest in U.S. properties because the luxury market here is significantly undervalued compared to other major cities throughout the world.
This article does a great job of illustrating how a shift in demand can take place as new buyers enter the market. This year in Manhattan the demand curve for apartments and townhouses in the $5 million-plus range has sifted outward as the new Chinese and Brazilian investors have entered the market. This has caused an increase in the number of units sold accompanied by an increase in the price of properties being sold.