The United States continues to be a prime destination for foreign direct investment (FDI) with its open investment regime and favorable economic and political environment.  With its top-notch and many universities, the U.S. also has been attracting an increasing number of international students.
Expanding trade and investment flows and increasing international student population present opportunities for engaging in real estate transactions with international clients. According to NAR surveys of its REALTORS®, about half of international clients are citizens of another country who are in the U.S. on temporary visas or are recent immigrants who have been in the U.S. for less than six months.
Over the period 2010-2013 (latest data available by country), the United Kingdom, Japan, and the Netherlands were the largest sources of foreign direct investment. Canada remained as a major investor (Chart 1). Among Asian countries, next to Japan were Korea, Australia, and China as the biggest sources of foreign capital. Although China has the least inflow in terms of volume of dollars, its growth has been the most spectacular, with inflows increasing from $114 million during 2002-2005 to $ 8 billion during 2010-2013, a 70-fold increase. Among Latin American countries, Mexico, Brazil, and Venezuela made the largest foreign direct investments. Not surprisingly, these countries have also been the major sources of international clients purchasing U.S. residential property.
California, Texas, New York, Florida, and Illinois were the major destination of investors, intra-company transferees, and those granted business waivers in 2013 (Chart 2). These states, except for Illinois, have also been the preferred locations of international home buyers.
REALTORS® have also reported that some international clients purchase homes for their children studying at U.S. universities and later use these homes for vacation or investment/rental purposes. China, Canada, Mexico, South Korea, Saudi Arabia, and India are the top countries of origin of international students (Chart 3). California, New York, Texas, Michigan, and Massachusetts were the top 5 states of choice of international students in 2013 (Chart 4). It’s worth noting that Michigan draws far more foreign students than Florida even though the state is notably smaller in population.What This Means to REALTORS®:
Increasing foreign investments in the U.S. and the accompanying flow of people is enhancing the opportunities for engaging in transactions with international clients. NAR provides training/certification to increase one’s expertise in dealing with international clients. Visit the website for more information at http://www.realtor.org/global
 Foreign direct investments are investments in which the investor seeks some long-term management control of the company by acquisition of some control of the company. The Organization for Economic Co-operation and Development, of which the U.S. is a member, considers 10 percent ownership of the voting stock of a company as a benchmark. Foreign direct investment differs from portfolio investments which are made for the purpose of portfolio diversification or securing a financial return.
 “Foreign Direct Investment in the United States”, Department of Commerce and the Council of Economic Advisers, October 2013. See http://www.whitehouse.gov/sites/default/files/2013fdi_report_-_final_for_web.pdf