Illinois Is a Top Destination For Foreign Buyers: How to Expand Your Business Globally

Over the last few years, Illinois has consistently found its way to the top of all US states that attract foreign buyers of real estate. So, what does this mean for REALTORS® in Illinois today? A REALTOR® who starts to work on expanding their international client base now will only benefit in the long run.

The National Association of REALTORS® recently released its 2023 rendition of International Transactions in US Residential Real Estate report, and Illinois was ranked in sixth place as an active market for
international real estate transactions. Specifically, Illinois accounted for 4% of the overall transaction volume over the past year, which was a 25% increase from 3% of the overall transaction volume in 2022. In 2023, Illinois saw around 47% of its transactions coming from Asian/Oceania clients, while Latin American/Caribbean clients accounted for another 29% of the volume. African and European clients rounded out the top client regions with each accounting for another 12% of the overall volume, respectively.

In addition to the NAR report, for the seventh consecutive year in a row, the readers of Condé Nast Traveler magazine
voted Chicago as the best big American city in their annual Reader’s Choice Awards. Illinois and Chicago are already viewed as top global destinations and great places to invest in real estate; let’s take a look at why our state and city consistently make the top of these lists, and, in turn, what makes them so desirable to foreign buyers.

From A Buyer’s & Investor’s Perspective: The Attraction of Illinois and Chicago

As the state’s largest city, Chicago is a major global destination with many vibrant and diverse ethnic communities. The city is a quintessential melting pot that supports a range of cultural festivals, centers and organizations across its 77 neighborhoods.

As a result, the “City of Big Shoulders” (a phrase coined by the famous Chicago poet Carl Sandburg to describe our diverse community of hard-working Chicagoans) appeals to foreign buyers who value multiculturalism, strong work ethics and social inclusion. They feel comfortable in Chicago.

The state’s broader economic opportunities are also attractive. Illinois is home to many Fortune 500 companies with globally recognized brands, such as Boeing, Walgreens, McDonald’s and Caterpillar. Moreover, Illinois has an excellent global reputation for its renowned universities, such as the University of Chicago and Northwestern University. Foreign buyers who are looking for employment, education or business opportunities may find Illinois an appealing destination for their real estate investments.

As a vibrant hub for the arts, Illinois offers a variety of attractions and amenities for foreign buyers, such as museums, world class opera and symphony, theaters, sports, parks, nature preserves and restaurants. Chicago, as described by Condé Nast Traveler is “a world-class destination known for its impressive architecture, first-rate museums, brilliant chefs and massive brewing scene.” Consequently, foreign buyers who enjoy urban living or outdoor recreation will find Illinois as an attractive destination for their similar lifestyle preferences.

Lastly, and arguably most importantly, Chicagoland real estate is relatively affordable compared to other major US cities such as New York, Los Angeles or San Francisco. Per NAR’s 2023 International Transactions in US Residential Real Estate report, the Chicago-Naperville-Elgin region boasts a $325 per square foot median home price over the last
year. This compares to a whopping $1,597 per square foot in New York, $1,380 per square foot in San Francisco and $793 per square foot in Los Angeles. In fact, per the NAR report, the Chicago region ranks 28th in median home price per square foot amongst US metro cities, just after Minneapolis/St. Paul and Atlanta and before Philadelphia and Indianapolis.

Investing in Illinois-based properties also provides a higher return on investment on an annual basis compared to similar coastal opportunities. Many investors note that they can realize anywhere from 5% to 10% Cap Rates (a measurement of annual yield on a real estate investment) on their Illinois-based investments while only realizing near 0% Cap Rates on investments located on either coast. Thus, those investing in Illinois real estate assets are more likely to experience immediate annual revenue streams instead of waiting for possible future capital gain returns.

In addition, Chicago has a strong rental market, with high demand and low vacancy rates. All of these factors combined ensure that Illinois real estate is a stable and profitable investment opportunity, especially for foreign buyers who plan to use their properties as vacation homes, rentals, or both.

How To Expand Your Business Globally

Given all these factors that attract foreign buyers to Illinois, here are several ways you can expand your business to these market demographics.

For one thing, foreign buyers can be separated into two groups. The first group consists of foreign nationals who have relocated to the US for a certain period of time and need assistance with purchasing a home. The second group consists of foreign investors who are located overseas and are interested in investing in US-based assets. In
either case, decide if your business strategy is focusing on just one or both groups.

Once you have identified your target markets of buyers/investors, educate yourself based on these goals. REALTOR® associations have excellent resources to expand your knowledge of serving foreign clients. For example, REALTORS® Real Estate School, the Chicago Association of REALTORS® affiliated school, offers a Certified International
Property Specialist (CIPS) designation
. Students get a strong, detailed foundation for conducting international real estate transactions while also exploring a vast global network of real estate brokers, each looking to source global deals.

As a REALTOR® with global reach, follow currency rates and stay well-versed in global economic and political issues. This is valuable information inherent to guiding your clients and will help you stand out from more domestic and locally focused peers.

Every country has its own set of rules and regulations that may affect how a potential investor can invest. Conversely, the US has its own set of rules and regulations that may affect how a foreign buyer from a specific country can invest. An internationally minded real estate professional will know these details and will be able to provide guidance to their client.

For example, it may not be possible for a foreign investor to secure financing, so all cash deals are more common. There may also be tax withholding requirements on the sale of a property as outlined in the Foreign Investment in the US Real Estate Act (FIRPTA). The Federal Government also offers programs, such as EB-5, that could help your client gain a US green card, if applicable. Keep in mind—some US states, such as Florida, are now adding restrictions on foreign investment.

Next, build your network with other internationally focused REALTORS® by getting involved with international committees or councils. For example, the Chicago Association of REALTORS® brings like-minded members together with the Global Real Estate Council.

Lastly, the world is a big place! It is critical to target or focus your business efforts on a few markets, then use that to intentionally identify opportunities to expand your networks. Get involved with one of the many consulates and chambers of commerce that host events throughout the year. Join Rotary International and the Chicago Council on Global Affairs where members can meet and network with possible future clients and/or leads.

The Importance of Relationship-Building Across Cultures

A successful REALTOR® must keep in mind that there are likely cultural differences and business best practices when working with buyers from other countries. Designations such as CIPS can help to educate certain important differences. The At Home With Diversity Certification also offers an in-depth, one-day education on how you can build culturally proficient, intentional practices into your real estate business. Your referrals depend on it.

Read about the cultures of your target markets! For example, Emily Post’s “The Etiquette Advantage in Business” has
several chapters on understanding cultural differences when conducting business with foreign clients from specific regions across the world. The more a REALTOR® can understand how to respectfully conduct business in and with other cultures, the greater advantage they will have against any other competing broker.

Illinois, as well as Chicago, will continue to hold its place amongst the top destinations for foreign real estate transactions for many years to come. Any REALTOR® that educates themself on how to serve these eager clients can expect to diversify their client and revenue base

Mikus Kins

Be Commercial Realty

Take Your Global Knowledge to the Next Level!

Certified International Property Specialist (CIPS) Designation

12 Hours of CE Credit | September 30 – October 4

The CIPS designation is for REALTORS® who wish to develop or grow their international real estate business. It will provide you with the knowledge, research, network and tools to globalize your business.

This course offers you hands-on experience with international real estate transactions, as well as five full days of study focusing on the critical aspects of transnational transactions.

At Home With Diversity

6 Hours of CE Credit | April 15

At Home With Diversity® (AHWD) is designed to prepare REALTORS® to work effectively with and within today’s increasingly diverse pool of homebuyers.

The curriculum encompasses topics of diversity, equity, inclusion, fair housing and risk reduction. Gain practical skills and tools to expand business and effectively serve all clients.

Or Connect with Like-Minded Global REALTORS® Through our Global Real Estate Council

The Global Real Estate Council supports Chicago REALTOR® members who do business with global markets (inbound and outbound transactions and/or consultancy).

Through events like the annual Global New Development Tour, which will take place this summer, the council also fosters strong relations with local organizations representing diverse ethnic and cultural communities in Chicagoland.