So far this year, the variety of foreigners contacting Yolanda Tajeda de Walker’s office looking for homes in Chile has run the gamut from younger New Yorkers looking to relocate to wealthy retirees who want a scenic second home in the Andean foothills.
"We’ve definitely seen an increase, not only in terms of purchasing, but for those looking for second or third homes and others relocating to Santiago," said Ms. Tajeda de Walker, who has been the international business manager at Chile Sotheby’s International Realty since December.
She’s not alone, it seems.
Real estate brokers and wealth managers are noting a movement of foreign property buying to parts of Latin America, thanks to a confluence of changing tastes and international events. Besides the draw of scenic vistas in Patagonia and the Caribbean, political shocks in the west, including the U.S. election of Donald Trump, paired with a strong dollar, and the British vote to exit the European Union, have buyers looking further afield than New York, London and Miami for places to invest and live part-time.
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It’s not just a matter of wanting more space for $10 million than a three-bedroom penthouse—though an isolated escape spanning hundreds of acres is part of the appeal. Investment in Latin America follows a trend among a cohort of high-net-worth buyers who are looking to diversify their long-term investments beyond major cities, particularly baby boomers thinking long-term as they prepare to handover fortunes to the next generation.
"We know that in the luxury segment that prices have come under pressure; it seems that rich people are not willing to pay any price to get access to well-located properties in big cities," said Thomas Veraguth, a UBS wealth manager.
"They understand that if they concentrate their wealth in a few locations then they concentrate the risk. They almost all have something in London or New York, and now they are looking to diversify their wealth given that uncertainty in the global economy and the political is becoming bigger than it was a few years ago," he said.
At the Sotheby’s office in Chile, two or three couples in the past three months have come looking to move completely from their U.S. homes. One couple, American freelancers untethered from living in any particular place, left New York City for Santiago out of frustration with the political climate in the United States, Ms. Tajeda de Walker said.
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But young urban transplants are the exception, most foreign buyers in the region want a lake or oceanside property, usually spanning hundreds of hectares in the southern part of Chile or Argentina, which they hold long-term.
"Interest is mainly in these large properties as a family investment," Ms. Tajeda de Walker said, adding that some take a genuine interest in conserving the land.
Douglas Tompkins, the late founder of Esprit and The North Face clothing companies, is perhaps the most famous eco-conscious foreign investor in Chile. He teamed up with fellow businessmen like George Soros and philanthropist Peter Buckley to protect large swaths of Argentina and Chile.
Among the newest crop of foreign buyer are the Japanese, who like other investors are looking for tracts of land in the south to hold onto for 20 years and eventually sell, said Maria Jose Borquez, of Chile-based Bórquez & Asociados, an affiliate of Christie’s International Real Estate.
"For the first time we are seeing a lot of Asian people coming to see properties or opportunities. We used to only see Europeans, mostly from Denmark, France and the U.K.," she said.
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Government policies have also helped attract foreign wealth to some parts of Latin America. In Argentina, a pro-business government has lured foreign buyers back to the market in the past year and a half. And the government in Belize has used substantial tax and retirement incentives to bring in foreigners.
The pro-business government in Argentina, led by President Mauricio Macri, after more than a decade of rule by the left wing Néstor Carlos Kirchner and Cristina Fernandez de Kirchner, has lifted currency exchange controls that hampered luxury and foreign property transactions. The Financial Times recently reported that foreigners who bought and sold homes in the country pre-Kirchners have returned to the market once again.
Research on prime property from British brokerage Knight Frank highlights the massive shift in Buenos Aires since Mr. Macri became president two years ago. In 2016, Knight Frank ranked Buenos Aires in 99th place in a list of top cities for luxury homes, almost dead last with luxury price growth at negative 8%. It beat only Lagos, Nigeria. But in the latest rankings, released last month, the Argentine capital skyrocketed to 59th place, above second-home mainstays like the Bahamas, the French Riviera and Miami.
Alejandro de Elizalde of Elizalde Garrahan, a brokerage that handles real estate in Argentina and Uruguay, has seen most of the recent foreign activity from buyers in Spain and Italy.
"Argentina offers all kinds of luxury properties," Mr. de Elizalde said. "Buyers of this type of property are the French, Italian, Spanish and American."
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The story is much the same further north in Belize, a tiny, English-speaking nation in Central America.
Buyers there are drawn to the beachfront estates and private islands as an affordable alternative to the Bahamas, said Andrew Ashcroft, managing partner of Blue Key Capital, financial advisers who facilitate investments in the Caribbean. Outside of his work with Blue Key, Mr. Ashcroft has also invested in the future construction of new beachfront homes to be finished in 2019.
As a way to lure foreign investment, the country has built an attractive retirement incentive program that offers foreign retirees tax-free residency as long as they make $2,000 a month. The nation is particularly attractive to Americans since the Belize dollar is also permanently pegged 2-to-1 to the U.S. dollar, eliminating currency risk, Mr. Ashcroft said.
Underscoring the growing U.S. buyer interest is the increase in the number of direct flights to the nation. So far this year, for example, Southwest Airlines launched new flights to Belize from Denver, Colorado, and Fort Lauderdale, Florida.
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The relative affordability has attracted even celebrity buyers like Leonardo DiCaprio, who is developing an eco-friendly resort on a private island off the coast of Belize. Depending on the area, beachfront homes range from $300,000 up to $4 million or more, Mr. Ashcroft said.
"It comes down to value," Mr. Ashcroft said. "The price of real estate in urban cities is so incredibly high. What they get for their money here is three-to-four times what they’d get in an urban city."
He added: "You can buy a mansion in Belize for the price of a one-bedroom bedroom in New York."
Here is a look at other news from around the world compiled by Mansion Global:
Luxury Home Prices in Oahu, Hawaii Spiked 23% in February
The normally sleepy month of February saw a 23% year-over-year increase in median prices for Oahu’s luxury properties, according to new data from Coldwell Banker Pacific Properties. Sales volume also jumped by 24% compared to last year. The numbers tracked sales of single-family homes and condos sold for $1.5 million or more, and saw the median price climb up to $2,159,000, compared to $1,750,000 last February. "February is typically a slow month, but this year was an aberration with sales up 24% compared to last year," said Coldwell Banker’s Patti Nakagawa. "This is a result of the unusually strong activity of accepted contracts in the December and January months when we normally see a slowdown." The increase is driven in part by closings in new development projects in the area, including the luxury apartment complex Waiea, a Howard Hughes property where prices range from $2.1 million to $4.9 million. (BizJournals)
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A Startup Is Offering Employees $10,000 To "De-locate" From Silicon Valley
In a nod to the Bay Area’s high prices and chronic housing shortage, one Silicon Valley company is now offering staffers a "de-location package" with up to $10,000 in reimbursed moving fees if they agree to move out of the Bay Area. Employees at Zapier, an automation company, all work remotely, and CEO Wade Foster said that he first got the idea after two employees recently moved out of state to be closer to their families. "We’ve basically just flipped relocation assistance on its head," said Mr. Foster. "A lot of folks just have a difficult time making the Bay Area a long-term home." Since announcing the offer, Zapier reportedly heard from 150 applicants in a single weekend, all of whom mentioned the de-location package. (The Guardian)
New Capital Controls Put Strain On Chinese Families Who’ve Purchased Overseas
Thanks to new government controls on outbound property investment, many mainland Chinese buyers are finding themselves stuck in limbo, having already splashed out for a down payment on a foreign property, but now unable to transfer funds to pay for the rest. "Now we understand all further installments need to be paid abroad. But this is not allowed due to the foreign exchange controls from the Chinese government," said Vicky Wu, a purchaser at Malaysian development Forest City, which has become something of a poster child for this phenomenon. In fact, a number of Chinese purchasers in the development now claim they were misled about the nature of their investment, and are trying to get their money back from the developer. Forest City denies any allegations of wrongdoing." (South China Morning Post)
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Tech Mogul Pony Ma’s Hong Kong Property Has Quadrupled In Value Since 2009
After his company, Tencent Holdings, saw a 43% profit increase in 2016, Pony Ma Huateng has seen another windfall: His luxury property in Shek O on Hong Kong Island is estimated to have quadrupled in value since he bought it eight years ago. Mr. Ma initially bought the 8,000-square-foot mansion for HK$480 million (US$62 million) in 2009, and after years of renovations and increasing values for properties in the area, experts now estimate its value at HK$1.9 billion (US$244 million), or HK$100,000 (US$13,000) per square foot. "The prices of super deluxe homes have recorded a significant increase in recent years," said Allen Wong of Landscope Christie’s International Real Estate. "Prices for these houses at unique locations will certainly increase as there’s a shortage of supply. These premium addresses are so rare that their valuations are like artwork." (South China Morning Post)
Investors From India Lead The Pack In The UAE Real Estate Market
Data from the Government of Dubai’s Land Department indicates that Indian investors continue to dominate the real estate market in Dubai, accounting for AED12 billion (US$3 billion) worth of transactions and 6,263 buyers last year, out of a total of AED 91 billion (US$25 billion) total investment from 55,928 investors. "The UAE’s safe haven status, stable economic growth and bottomed out prices have been the key factors for attracting Indian realty investments in Dubai," said Dawood Al Shezawi, one of the chief organizers of the forthcoming International Property Show. "In addition, many Indians find Dubai as their base for business between India and the wider Europe and Middle East." (Khaleej Times)
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Dubai Developers Wooing Buyers With Increasingly Valuable Concessions
In a slowing market filled with stiff competition, Dubai’s developers are now adding sizeable incentives to off-plan deals, in many cases including multi-year rental guarantees "in the high single digits" to lure investors. In some cases, they’re also offering to cover the 4% registration charges that buyers normally must pay to the Dubai Land Department. As a result, even as prices stagnate in the upper end of the market, off-plan sales last year accounted for as much as 60% of transactions, far outpacing the secondary market. The trend is putting pressure on regular investors to significantly lower their asking prices in the secondary market, while also shrinking developer margins. "Such rental guarantees [...] are a mechanism by which developer profitability is being adjusted lower at the higher end of the market," said Sameer Lakhani of Global Capital Partners. "This is part of the normalization process of developer margins that are underway."(Gulf News)
Tourism Helps Drive Modest Increase In Japan’s Land Prices
For the second year in a row, Japan’s land prices saw a slight increase, a trend that is attributable to booming tourism and a new demand for space on which to build hotels and shopping complexes. Data from the Ministry of Land, Infrastructure, Transport and Tourism shows overall land prices having risen 0.4% in 2016 (compared to 0.1% in 2015), with commercial prices rising by 1.4%, while residential prices held steady after eight years of declines. "Demand for properties were strong, which helped land prices to improve steadily," said Noritoshi Yasuoka, the director of the Ministry’s research division. Japan saw a whopping 21.8% increase in foreign visitors last year, bringing totals up to a record of 24 million, with travelers visiting regional cities in addition to major hubs like Tokyo and Osaka. Overall, land prices for Fukuoka, Hiroshima, Sendai, and Sapporo—four major regional cities—rose 3.9%, while prices in the regions surrounding Tokyo, Osaka, and Nagoya rose 1.1%. (Reuters)
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Amid New Rules, Canada’s Luxe Real Estate Market Faces "Unprecedented Uncertainty"
A new report from Sotheby’s International Realty Canada indicates that while prices in most major cities continue their dramatic climb, the market faces "unprecedented uncertainty" as more cities consider strict regulations to cool their booming markets. While strong markets are expected to continue into the spring, Sotheby’s president and CEO Brad Henderson called possible new legal restrictions "wild cards," adding, "They need to be done thoughtfully, not as a reaction to what has really become a very political issue." While luxury home sales saw steep drops in Vancouver, sales of homes over $1 million increased 87% in the greater Toronto area, and Montreal saw a 13% rise in luxury transactions. (Montreal Gazette)
Melbourne’s Re-Purposed Properties See A Surge In Popularity
Buyers in Melbourne are increasingly interested in purchasing conversions—snapping up homes in former warehouses, churches, and stores, according to Frank Valentic of Advantage Property Consulting. "We’ve helped a lot of young professional couples buy into conversions because they like something a bit quirky and unique," said Mr. Valentic. "There is an infinite number of newly built apartments in Melbourne but there is a limited number of conversions which is a draw factor." A number of these types of high-end conversions are on the market and expecting steep sale prices at the moment, including The Wesleyan Church, which has been converted into townhouses, expect to sell for around $1 million apiece; a former furniture factory at 114 Munnering Lane that’s now a two-family home expected to auction for $1.6 million to $1.7 million; and a 19th century warehouse conversion at 1 Duffy Place, now expected to auction for between $2.2 million and $2.4 million. (realestate.com.au)