Top Luxury Real Estate Markets Where Cash Deals Are The Norm
Cash offers for residential real estate surged last year as more affluent buyers opted against taking on a mortgage to avoid high interest rates. But in some luxury markets, cash deals for high-end homes are just the typical way of doing business.
Dubai, United Arab Emirates
All-cash deals have been the rule rather than the exception in Dubai for quite some time, but the city on the Persian Gulf has still seen a marked increase in cash purchases over the past two years. It’s common for ultra-high net-worth individuals who choose to buy here to purchase in all cash. It’s very rare that ultra-high net-worth individuals look for a mortgage for their primary or vacation homes.
Cape Town, South Africa
Roughly 70% of luxury real estate purchases in Cape Town are all-cash deals. Cape Town is one of the most desirable places to live, and with the exchange rate in favor of foreign buyers and the prime lending rate at a 14-year high of 11.75%, all of the residential sales to foreign buyers are cash.
Despite increased government scrutiny on cash deals in Hong Kong, cash purchases are still preferred by sellers in the China-controlled financial center. In most cases, purchasers buy these luxury properties under separate company entities for easier management and flexibility for the next transaction. It creates an extra layer of privacy. Some high-end buyers in Hong Kong will take out mortgages for 10% of the purchase price rather than make an all-cash purchase because cash transactions are subject to probes from the government over money laundering concerns. The government will have less concern if there is a mortgage, which implies the source of money is checked by banks that approved it.
Text by Breck Dumas | Photo credits on foxbusiness.com | Read More Here