Americans Look Abroad

Increasingly, American affluent consumers are looking beyond U.S. borders. According to the latest Wealth-X figures, the number of American high-net-worth individuals who purchased an overseas property in 2022 is projected to rise by 14% from 2021 and 29% from 2019. While the strength of the U.S. dollar against other currencies may be driving most of this demand, the wealthy also cite other reasons for looking abroad, including the rising cost of living in the U.S., surging home prices, and political climate at home.

The propensity for international property ownership is already high among affluent Americans. According to our survey, 67% of respondents already own investment properties outside of the U.S. Currently the age group with the largest share of ownership of foreign property is 55+.

Our survey also reveals that nearly 92% of respondents are now considering purchasing a property abroad, with Central America as their top preference (23%). Not surprisingly, Canada and Mexico came next (given their geographical proximity to the U.S.), followed by Asia, South America, and Europe. The 55+ age group still have the most propensity to purchase abroad, but it is the younger demographic (ages 25 to 34) who show the greatest change in their aspirations, moving up the ranking from last to second position.

Top Choice: Central America

In terms of where they are searching for their next international property, they’ve turned their sights to Central America. Belize, Costa Rica, and Panama.

From breathtaking beaches to pleasantly warm weather, and a low cost of living compared to the U.S., these countries have become popular spots for wealthy Americans. While Costa Rica is considered “tax-friendly,” Panama and Belize are better known for being traditional tax havens.

“We’ve seen tremendous growth in U.S.-based foreign investment over the last three years given the very low luxury property tax rates and recent incentives for digital nomads and tech companies,” said Daveed Hollander, President and CEO of Coldwell Banker Costa Rica. “Prices have doubled in some markets as the demand for luxury properties outpaces inventory. We expect this trend to continue over the next three to five years.”

Next Hot Spot: Europe

Interest among U.S.-based affluent buyers may increase for Europe,4 thanks to a surging U.S. dollar and a weakening Euro.

Italy, Portugal, Spain, Greece, and France are among the most popular European countries, according to Coldwell Banker Global Luxury Specialists. Second homes have become the “plat du jour” in European destinations such as Tuscany, Barcelona, and St. Tropez. Prices in these cities may be up year-to-year, but are still a far cry from the dramatic increases seen in the U.S. Italy remains one of the most attractive countries for foreign investors due to its flat tax, historically low home prices compared to the historically high home prices in the U.S., and favorable exchange rate.

“Both the commercial and the residential real estate markets provide numerous investment opportunities to international citizens coming to Italy,” said Roberto Gigio, President and CEO of Coldwell Banker Italy. “The government has also enabled

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programs for high-net-worth individuals who want to obtain Italian residency by purchasing a property in the country. In the last two years, we have received many requests from potential buyers from the United States, but, due to restrictions, they could not travel here to Italy. Fortunately, things have changed in the last few months. This summer there were many U.S. clients who went to our agencies in Italy.”

Rising Demand for Golden Passports

Interest in obtaining “golden passports” – either dual citizenship or residency in exchange for investing in the country – has gained popularity in the last few years among the wealthiest of Americans who view these programs as a sort of insurance policy. Their pursuit of such programs is as much about freedom of movement as it is about uncertainty about the future.

In the European Union, countries such as Portugal, Italy, Greece, and Ireland offer golden visa programs, which basically give the wealthy the opportunity to “buy” the right to residency either by purchasing a house in the country or making a large investment or donation. Passport firm Get Golden Visa predicts 2022 will be “its busiest year yet.” (Wealthy foreigners looking to obtain citizenship in the U.S. have long employed a similar method, the EB-5 visa,5 which lets those who invest over $900,000 in the U.S. jump to the front of an otherwise extremely crowded immigration line).