Demand from Middle Eastern investors for US real estate has intensified over the last year—bolstered by the continued strength of the US dollar. Research from Knight Frank indicates investment into the US from the Middle East has more than doubled in the past year, accounting for 15.4% of all global cross-border property investment in the 12-months to the end of September 2019, up from 7.2 per cent over the previous 12-month period.
Middle Eastern families are increasingly turning their attention to intergenerational planning to preserve the passage of wealth. Real estate investment remains a significant asset class for wealth preservation, evidenced by 29% of Middle Eastern UHNWIs increasing their portfolios’ allocations to real estate in 2018, according to Knight Frank’s Wealth Report published earlier this year.
Knight Frank’s global head of research, Liam Bailey, comments: “Middle Eastern investors have long been a critical component of the US property sector. The data we have assessed here considers the whole investment market – residential and commercial – and reveals the recent growth in demand from the region into the US. Investment here offers an opportunity for portfolio diversification but also importantly permits access to the underlying dynamism of the US economy.”
Approximately 42% of all UHNWIs own second homes outside their country of residence (Knight Frank’s Attitudes Survey), and while a plentiful supply of real estate in the US spans both branded and non-branded residences, the former has outperformed the average price in the prime resale market. This is due in part to the convenience of a turn-key lifestyle, service provision, on-site building maintenance, expansive amenities, and rental/investment yield potential. Properties featuring access to luxury hotel services are even rarer and constitute the most premium options at the top of the Manhattan condominium market.
US cities like New York City are among the strongest real estate markets for foreign investment for several reasons. The current state of the global economy coupled with increased geopolitical uncertainty have negatively impacted a vast number of other prime markets. In New York, an increase in new inventory combined with a reset in pricing at lower levels has created market conditions with more upside potential than the last several years. This, combined with global currency fluctuations and no foreign buyer stamp duty taxes, makes New York City an extremely favourable and stable place to invest for overseas purchasers. New York City is currently ranked as the #1 city for investment according to Knight Frank’s 2019 Wealth Report.
Upcoming investment opportunities include The Towers of the Waldorf Astoria—the world-renowned symbol of New York hospitality—currently being transformed into an unprecedented residential destination in concert with the restoration of the iconic Waldorf Astoria New York hotel. Condominium sales are set to launch in Q1 of 2020.