When it comes to luxury homes few places in the world enjoy the same density as California, and when it comes to an active, healthy sales market, Los Angeles is #2 in the United States for the highest priced luxury home sales in the last quarter of 2014. But in a surprising trend reversal for American history, while the country still welcomes immigrants with open arms to a new and better life, it is foreign investors who are responsible for some of the most numerous and most expensive luxury real estate transactions taking place in the country today, with Asia in particular leading the pack for high volume real estate purchases.
One of the biggest reasons this is occurring is one of the oldest reasons around; property is one of the safest investments that a person can make. While some people looking into these properties are interested in moving in and taking up residence, others are taking a more business-like approach and viewing luxury real estate in America as conservative investment with good odds on a higher return as the property continues to appreciate in value. These are safe places to put money, and definitely lack the high tension and risk of stocks and other commodities. This is about asset diversification, ensuring that money is in a safe place protected from financial influences in the world market.
However, it’s not just traditional luxury homes that are seeing a big surge, it’s also condos that are benefiting from this influx of investment. Luxury condos are being constructed in many parts of the world, and the USA is no exception, with the usual expectation that the higher the building is, the more the property can potentially be worth. And the investment isn’t just going into the construction, it’s going into the design. Many high profile architects like Jean Nouvel and Frank Gehry—just to name a few—have been commissioned to bring their distinct vision to a new generation of luxury residence buildings.
While all of this real estate activity is obviously good, that doesn’t mean things are going to be good forever. The nature of any economy is one of change, and sometimes that can be good or bad. Asian property investment, particularly from China, is entering an uncertain time as the Chinese economy itself slows down and the government faces the mounting problem of the debt it has acquired during its years of explosive growth. What this means for the future of foreign real estate deals in America is still uncertain, but that’s all part of the dynamic market that is luxury real estate.