Tuesday, July 19, 2011

Foreign Investors may Be Fueling Increase in Real Estate Trends in Some Areas

Foreign investors may be fueling what little surges in real estate sales that may exist. In Silicon Valley, California, for example is cited as an area with projected property value climbs and the attractiveness of the area as a future home for many foreign investors. “We’re getting a huge influx from China and India,” explains one upscale property specialist in the area, adding that “there is just a lot of wealth there.”
“I’m telling all my friends this is the time to find good deals in Silicon Valley,” says a stay-at-home mother from Guanhzhou, China, who just bought a $500,000 home in Fremont with her husband. They believe that property values in the area are set to skyrocket in the next five years and that “your real estate slump makes this a great time for us to buy.” And should they opt to move to the area, it offers good “culture…business environment and good education for the kids.”
Foreign investors typically have another competitive advantage in the market place. They are buying at a premium to the US dollar since many currencies have strengthened against the dollar. Many Asian buyers are buying at 30% discount because of currency spreads. This makes attractive deals even MORE attractive and affordable.
In fact, some analysts believe that Silicon Valley is set for another “boom” as “investors pile into internet IPOs and startups” while “house prices and salaries soar”. Office rents in the area are also climbing, with some buildings reporting 35 percent hikes. Hotels are regularly logging 80 percent occupancy and higher. The boom is leading some to speculate that another bust – reminiscent of the dot-com bubble – is on the way, but chief executive of Weebly.com, David Rusenko, disagrees. “These are all wealthy, private individuals who understand the gambles they are making,” he says. “It’s not like in the dot-com days when grandma was placing bets on IPOs,” he adds. And conventional wisdom indicates that this latest “tech boom” could last into 2013. The question is, in 2014, will Silicon Valley properties still be worth the money paid the year before?

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