| Survey Findings
There are very few specialists in international real estate; most transactions are incidental to domestic business and involve permanent resident aliens.
While less than one percent of REALTORS® are involved in international transactions, few are exclusively international REALTORS®. International real estate transactions are typically combined with domestic business.
In 2000, 84 percent of REALTORS® who responded to the survey reported to have completed at least one transaction with a permanent resident alien. However, the majority of respondents (60%) reported incidental international transactions (less than 20 percent of their overall business). Twelve percent of the respondents are still in the process of establishing an international business niche, with international deals comprising 20-39 percent of their overall business. Ten percent of the respondents can be considered key market players with 40-79 percent of their business devoted to international transactions, while only three percent were the only specialists with international deals accounting for 80-100 percent of their total transactions.
Interest in real estate by permanent resident aliens were proportional to transactions as most have fielded inquiries but once again comprises of less than 20 percent of their total business (54%). Interestingly, a significant difference can be seen in those who put a major focus on international dealings as 14 percent of survey participants report more than eighty percent of their inquiries are from permanent resident aliens, much higher than the 3 percent who focus on this group and close transactions.
Marketing channels used to attract international real estate business are less likely to be a general, mass effort.
Referrals were the dominant marketing vehicle used in attracting business with permanent resident aliens for all respondents (72%) and statistically similar for the residential and commercial markets. Personal referrals from friends or colleagues were most instrumental on the residential side as were community involvement and speaking the same language as their clientele. Networking within international groups such as CIPS, FIABCI and foreign real estate associations were the most effective for the commercial market.
Advertisements were second with 32%, with both venues reporting similar numbers and included a variety of methods from foreign language newspaper ads to signs in storefronts of ethnically diverse communities Around 27 percent of respondents across the boards reported Internet as a way of attracting business. Overall, three percent of respondents obtained business using other methods and respondents to the commercial survey were more likely than their residential counterparts to do so. The other category included methods such as direct mail, initial contact by the customer due to firm recognition and international satellite offices, all more characteristic of commercial real estate.
On the commercial side, permanent resident aliens are starting or expanding businesses across international borders.
Office properties were the most sought out by permanent resident aliens in 2000 covering over a third of all transactions in international commercial dealings. Land, retail and industrial properties held similar numbers with 17, 19 and 19 percent respectively. Multifamily properties interested seven percent of clientele while hotels came in at two percent.
Real estate transactions of permanent resident aliens are on the rise.
Almost four fifths of all survey respondents indicated business with permanent resident aliens in the past five years has increased. In fact, those reporting the trend as significantly increasing made up the majority of the respondents while those who saw decreases made up barely three percent of the total.
The commercial results held true to overall statistics but showed more extremes in the significantly increasing and decreasing categories than the residential results.
The residential results mirror overall numbers when compared to commercial results. Both venues had almost the same amount declaring there was no change in international business trends in the past five years.
The non-immigrant niche is a very small subset of international business due to the greater transient nature of its clientele. This leads to less REALTOR® involvement but more focus specifically in this specialization.
International real estate activity for non-immigrants generated less attention from REALTORS in 2000 than for permanent resident aliens by one third. Seventy percent of all REALTORS® who responded to the international survey reported to have completed at least one transaction with a non-immigrant compared to 84 percent for permanent resident aliens. Commercial real estate practitioners were more likely than residential practitioners to not have done any business at all with non-immigrants with a little under half claiming involvement.
The amount of transactions completed in relation to their businesses is less than twenty percent for more than half of overall and residential REALTORS® but interestingly, on the commercial side, far less of the respondents reported so. However, commercial REALTORS® show significantly more involvement in all other divisions except for the eighty to one hundred percent range, which remains comparable.
As with permanent resident aliens, inquiries by non-immigrants remain secondary to domestic business for the most part. A change in the trend is noted for the eighty to one hundred percent category where 7 percent of all respondents reported international inquiries as the major focus of their business leads. The special, shorter-term needs of non-immigrants have carved out a niche for those providing real estate services for them.
Small niche size makes non-immigrants a close-knit and specifically targeted community by REALTORS®.
Two thirds of survey respondents that dealt with non-immigrants reported referrals as the primary marketing vehicle used in attracting business in 2000. Personal referrals arising from common ethnic backgrounds still remain the most common way non-immigrants attain real estate in their host countries. The role of international organizations on the commercial side seemed to take on more importance for attracting non-immigrant business, as advertisements were less utilized than in traditional real estate markets. Internet use as a marketing vehicle was constant for all respondents across the boards, which seems to be a result of the effectiveness of the vehicle limited by the target group’s comfort with technology. Commercial REALTORS® still relied heavily on firm recognition and satellite offices for other ways in attracting business while the residential side saw a large amount of non-immigrants take the initiative by responding to listings, signs and open houses.
Non-immigrants are more likely to seek out office space to accommodate temporary work situations.
Slightly less than half of all commercial properties sought by non-immigrants were office properties. Retail and land were the next two common properties with 24 and 18 percent respectively with multifamily and industrial properties both coming in at 5 percent. None of the respondents who participated in the international survey reported any non-immigrant interest in hotel properties.
Real estate transactions of Non-immigrants aliens are on the rise.
The past five years have shown a healthy appetite for real estate in their host countries by non-immigrants. Seventy-nine percent of respondents in this subset witnessed some sort of increase in business while only two percent overall saw any kind of decline. According to the commercial participants in the survey, their market experienced substantial growth in the past five years while no participants cited a significant decrease. Residential results were more likely to state there was no change in the past five years in transactions with non-immigrants when compared to commercial results but overall saw favorable conditions.
Foreign institutions and private companies are active in international real estate.
In 2000, 54 percent of all REALTORS® that do some kind of international business completed at least one transaction with a foreign company or agency. Not surprisingly, Commercial REALTORS® were more involved in this category than their residential counterparts, 71 percent of commercial respondents compared to only 54 percent of residential. The commercial survey results showed the strongest yet involvement within this subset of international business does have a small but surprising presence.
Commercial REALTORS® also fielded more business inquiries from foreign companies or agencies with 54 percent of all survey participants with at lease one inquiry in 2000. In fact, foreign companies and agencies showed a healthy interest in international real estate, which is reflected by higher concentrations of inquiries and transactions for commercial respondents. Many firms also had their primary focus on such business as the eighty to one hundred percent range was more represented.
Residential results, though less than commercial, showed foreign institutions and companies showed interest in residential real estate opportunities as well. Neither venue captured any firms in the sixty to seventy-nine percent range.
Marketing focuses on referrals in attracting international real estate business for foreign companies and agencies.
Foreign companies and agencies primarily used referrals as the main marketing channel in buying or leasing international real estate with half of all respondents. Professional referrals were the mainstay for both commercial and residential venues while common ethnic ties was less of a factor in establishing business as it was in the other categories. Internet usage remained standard to the industry with about one quarter of respondents utilizing this channel. Advertising was used by almost one fifth of all respondents while the other category, including methods such as prospecting satellite offices and direct mail, claimed 9 percent.
Market expansion generates demand for office properties.
Consistent with all other types of international transactions, foreign institutions and companies are seeking or offering more office space as they expand their markets in 2000. Office properties covered over half of all transactions in international commercial dealings. Industrial properties were the only other group to gain significant attention from foreign companies with 26 percent of transactions. Land, retail and multifamily and hotel properties were less popular with single digit shares.
Real estate transactions of permanent resident aliens are on the rise.
Businesses with foreign companies and agencies have been on the rise in the past five years as almost four fifths of all survey respondents indicated increases. Significant increases are the majority with 62 percent with slightly increasing, no change and slightly decreasing observations make up the rest. Interestingly, no respondents reported a significant decrease in the residential or commercial venues.
Methodology
In May 2001, the Research Group of the NATIONAL ASSOCIATION OF REALTORS® e-mailed an electronic questionnaire to 100,000 randomly selected members of the Association and its international affiliates. Of the 721 total responses, 629 were members of the NATIONAL ASSOCIATION OF REALTORS®. For the purposes of this study, only members of the Association were included and further broken down, 560 responses completed the residential version while 69 completed the commercial as the questionnaire covered both real estate markets.
A transaction or inquiry is considered to be international if the nationalities or citizenships of the components (buyer, seller, source of financing) are not homogenous. The components were also segregated into four categories for both the residential and commercial versions. | 
