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Foreign Funds for Real Estate Contracting Worldwide

Posted by Jose Marc Castro on Mar 09, 2016 08:10 PM EST
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(FILE PHOTO) The sun sets over the Toronto skyline in his undated file photo. The International Olympic Committee (IOC) meets in Moscow July 13, 2001 to decide between front runners Beijing, Paris and Toronto for the site of the 2008 summer Olympics. (Photo : Carlo Allegri/Getty Images)

In recent news, the presence of foreign funds put into global real estate markets had started to contract. A recent report from the Canadian Mortgage and Housing Corporation, as published in, revealed the moves of the government agency in monitoring and curbing foreign money in the Canadian real estate market.

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This comes amidst major criticism received by the agency for its lack of data about money entering the local real estate market from foreign countries. This is important to determine if such funding was the cause for the soaring home prices seen in major metropolitan markets such as Vancouver and Toronto.

Many other countries have followed suit, establishing controls and monitoring systems to track foreign funds entering their local real estate markets. These include Australia, the United Kingdom, Switzerland, Mexico and Hong Kong.  Amongst the systems in place include time limits on sale and re-sale, down payment requirements, quotas on allowable sales and higher tax impositions on foreign funded purchases.

To the south of Canada though, there is a different reaction to the presence of foreign funds in the local market. In a report published on Realty Biz News,  the demand from overseas buyers of properties in the United States have started to decline.  The contraction is being blamed on the ever increasing real estate prices alongside the stronger US dollar exchange.

This was not the forecast made last year, as experts believed that foreign demand would continue to remain high as the US market was perceived to be a safe haven for investment purposes.  The tide had reversed as late as June of 2015, when reports showed that the top foreign buyer of US real estate had come from the Chinese mainland.

Despite the keen interest, the investments have started to decrease due to the increasing prices in favored real estate markets such as New York and San Francisco. The stronger dollar also posed an increased hindrance to make investments in the United States, as it would require more foreign money to meet the same value purchased. 

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