While Chinese buyers continue to dominate among foreign investors in U.S. real estate—they spent a record $36.6 billion last year—the buzz among industry insiders increasingly revolves around another group.
Wealthy people in India are emerging as the new wave of international property buyers, particularly in New York City, where real estate brokers are taking notice of their growing wealth.
The number of high-net-worth individuals (HNWI)—people with investable assets of $1 million or more—in India grew by 26.3% to 198,000 and this group’s wealth increased by 28.2%, to a total of $785 billion. Both gains were the largest in the Asia-Pacific region and across the globe, according to the World Wealth Report 2015, which was prepared by Capgemini. The consulting firm also expects India and China to jointly hold 10.7% of all global HNWI wealth by 2017.
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Indians are already the third-largest group of foreign homebuyers in the U.S., after the Chinese and Canadians. According to last year’s Profile of International Home Buying Activity by the National Association of Realtors, Indian buyers spent $7.9 billion on U.S. properties in the 12 months ended in March 2015, compared with $5.8 billion in the same period in 2014 and $3.9 billion in 2013. Their purchases represented 8% of total international sales by dollar value.
At a recent industry event in New York City, in a panel about foreign purchasers, many real estate brokers identified Indians as emerging buyers in their markets. The brokers said it was a result of Indians' growing wealth and existing family connections in the U.S.—many already have children studying here—and their knowledge of English.
For real estate brokers Nicole Grandelli and Jason Lanyard of Stribling in Manhattan, however, the increasing prevalence of the Indian buyer is not news.
The business duo has been forging a relationship with this group since the late 2000s when a client of Lanyard referred to him an Indian buyer who later recommended him to several of his friends looking to purchase property in New York.
Since then, Lanyard and Grandelli have made several trips to Mumbai and New Delhi in order to meet with more potential clients and industry players, including real estate agents, wealth managers and attorneys. Today, Indians make up a third of their clientele, according to Lanyard.
Most Indian buyers, say Grandelli and Lanyard, are looking to make purchases that are long-term investments.
“They want to know that they’ve made the smartest investment,” said Grandelli. “They will never buy something they won't make a profit off,” added Lanyard.
One of their clients purchased two apartments at the Metropolitan Tower in Midtown for $3.87 million back in November 2012. After spending approximately $750,000 combining and renovating the units, the Indian client sold the property for $6.3 million last June.
Indians will also only work with people they trust, someone they have already worked with, or a relative or friend, said Lanyard and Grandelli.
“An Indian will never call someone they read about in [a news] article,” noted Lanyard.
Most Indian buyers will acquire property with the plan to rent it with the possibility of living there in the future. Or they will transfer it to their children who are studying in the U.S. and who might not want to go back to live in India after graduating.
Aware of this strategy, Grandelli and Lanyard offer to manage their clients’ properties while they continue to live in India and advise them on when it is a good time to liquidate their assets.
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Buying luxury real estate abroad is not always a smooth process for Indians, whose country’s laws limit the money they can export to $200,000 per year per family member, said Lanyard. He always recommends his clients work with experienced and trusted attorneys and tax specialists back home to make sure they will be able to deliver the funds to complete a transaction.
Still, in a softening high-end market, with room for negotiation, Grandelli and Lanyard expect the pool of Indian buyers will continue to grow.
“They will never buy at the top of the market,” said Lanyard. “They need to feel that they are getting a deal,” added Grandelli.