By Bill Gottfried, 2015 HAR IAG Chairman
$11.06 billion (U.S.) worth of real estate in Texas was sold to international investors between March 2013 and March 2014. This represents 12% of all international real estate sales in the U.S. during this period, with a large percentage of these sales taking place in the Houston Metropolitan area (source: NAR and TAR data), ranking the Lone Star State the thirrd largest state in the U.S. for international home sales (NAR data). Chinese investors purchased $22 billion worth of real estate in the U.S. during this same time period (NAR and Wall Street Journal data), with a high percentage of this investment in Texas, including real estate in the Houston Metropolitan Area. The Katy Area Economic Development Council reports tremendous interest by Chinese investors in Katy real estate over the past 24 months. The Pension Fund of the Government of Korea invested $450 million (U.S.) in commercial real estate in downtown Houston during 2013 (source: Wall Street Journal data); and real estate investors from The Kingdom of Bahrain invested over $250 million (U.S.) in commercial and multifamily real estate in the Houston metropolitan area during 2013 (source: Wall Street Journal data).
Houston ranked eigth among all U.S. cities in foreign buyers of U.S. commercial real estate during the past 24 months with $2.53 billion (U.S.) in commercial real estate invested by foreign investors in Houston during this period (source: REAL Capital Analytics). Dallas was ranked ninth, with $1.9 billion (U.S.) in commercial real estate sales to foreign investors during this same period. In addition, the average Cap Rate (yield) during the past 12 months for commercial properties in Houston was 7.5%, compared to the average U.S. Cap Rate of 6.9%; Houston’s Cap Rate is almost 10% higher than the U.S. national average (source: REAL Capital Analytics). The icing on the cake is that Texas ranked second, behind North Dakota, in job growth during the past 12 months, fueled by U.S. and international energy company investments in Texas, with Houston continuing to be the energy capital of the world.
The tremendous job growth in the Houston Metropolitan Area, increasingly supported by international energy company investments in the region, supports the robust real estate environment we are in today.
Houston is on the global real estate stage, with international investors coming to Houston from China, Canada, The United Kingdom, India, Mexico, Japan, Russia, the Middle East, and from additional countries in Latin America, Asia, and Europe. The Houston Association of REALTORS® (HAR) and the HAR International Advisory Group (HAR IAG) will continue to lead the way forward in supporting HAR Members who are working with international buyers and investors in the Houston Metropolitan Area.
During the past several years, HAR IAG has developed and implemented many important programs and initiatives to support HAR Members who are working with international clients. International MLS Area 82 was inaugurated several years ago to provide HAR Members with a MLS portal to list their international properties in the HAR MLS System. HAR has hosted the Certified International Property Specialist (CIPS) Institute on a regular basis for many years. CIPS is the “gold standard” designation for REALTORS® involved in international real estate.
During 2015, HAR IAG will continue to press ahead actively to support our HAR Members as foreign investment in our region accelerates. HAR IAG will focus on supporting international investors, and HAR Members who are representing them, from the regions of the world where most of the foreign investment flowing into Houston is originating, including: China and Asia, Canada, the United Kingdom, India and Southeast Asia, and Mexico and Latin America. The IAG will be planning additional education programs and events to support HAR Members who are representing clients from these regions of the world. We will again be hosting the CIPS Institute in 2015 and we highly encourage all HAR Members who are involved in international real estate, or who are interested in international real estate, to take the CIPS Courses.