Foreign Investors Set Their Sights On Austin In A Real Estate Twist, Survey Says
Austin is the U.S. city with the most interest from foreign real estate investors this year, a new survey found, signifying a shift in investment toward smaller metropolitan areas as the coronavirus pandemic and rise in remote working pushes people out of large cities.
Austin is the top-ranked city among international investors for 2021, according to a new survey.
Nearly one in four survey respondents ranked Austin as the top market to increase real estate exposure in this year, while a third ranked it within the top three cities, according to an annual survey by the Association of Foreign Investors in Real Estate.
Austin’s top ranking is a huge jump for Texas’ rapidly-growing capital city—in last year’s survey, it was ranked just tenth by international investors.
It’s the first time a tertiary city, or a smaller metropolitan area, has ever ranked in the top three in three decades of AFIRE surveys, the investment association said, and marks a significant shift in investor interest.
More than 60% of survey respondents said they expect to bump up their investment in tertiary cities over the next three to five years, and 80% plan to do the same in secondary cities, or medium-sized metropolitan areas.
Investors indicated they are less interested in investing in large cities, like New York and Chicago, which were each ranked as one of the top three markets to lower real estate exposure by more than half of survey respondents, along with more than a third who ranked San Francisco in the top three.
Like in previous surveys, multifamily property remained the most popular kind of property among international investors, with 86% of respondents saying they intend to increase multifamily property exposure over the next three to five years.
“Smaller cities like Austin are experiencing healthy growth in populations and income thanks to higher relative affordability, younger demographics, and employers looking for highly skilled workers,” AFIRE CEO Gunnar Branson told Forbes in a statement. “International investors have tended to focus their commercial property investing in primary gateway cities like New York, Los Angeles, or San Francisco … but as migration patterns, property use, and growth expand to other cities, so do their investment strategies.”
184. That’s how many residents Austin gained per day on average last year, according to data from the U.S. Census Bureau released this week, for a total gain of 67,197 additional residents in 2020. Austin was the fastest-growing city in the country with populations of more than 1 million.
The survey results come as large, expensive cities across the U.S. like New York and San Francisco see residents leave in favor of smaller and less expensive metropolitan areas. Austin, with its relative affordability, high quality of life and Texas’ low tax rate have made the city an attractive destination for workers and businesses alike. However, the influx of new residents may be driving up prices for locals. According to a report from the Austin Board of Realtors last month, Austin’s median home price skyrocketed by almost 29% compared to the previous year, representing the highest housing market jump in the country. It was also a record high for the metropolitan area, with the median house price clocking in at $425,000. According to Redfin, which did the study, Austin and other cities with increased housing prices had been popular with newly remote workers leaving expensive coastal cities during the pandemic. The AFIRE survey took into account more than 100 responses from both association members and nonmembers.
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