A look at the best American cities for education and real estate investment
For millennia, people have been crossing borders in pursuit of better opportunities. Today, many of those opportunities come in the form of education and investment, and—increasingly—many in Southeast Asia are pursuing both at once, sending their kids to universities abroad and simultaneously buying property as a residences for themselves or their students.
The United States, with a large number of top universities, is a particularly attractive education destination. Of the best 500 schools as judged by the 2013 QS World University Rankings, seven of top 11 schools in the world—there was a tie for number 10—are in the United States. In 2013, there were 819,644 international undergraduate students attending US universities, according to the Institute of International Education (IIE), with around 60 percent coming from Asia—29 percent from China alone.
Asian investment in the US property market is also on the rise, and with London, its chief Western competitor, likely to introduce a capital gains tax in the near term, America is likely to look even more appealing. In addition to providing housing for students in the short-term and opportunity for capital growth in the medium or long term, property in major US cities is also attractive to parents who wish to have a holiday or retirement home in the future.
“Several of my Asian executive buyers bought one unit and even three adjacent units and combined them, making it a perfect retirement home, pied-à-terre or vacation home,” said Soiti Roy of Sotheby’s International Realty in New York City.
In addition to being good destinations for students, all of the cities on our list were rated positively for residential investment by the Urban Land Institute’s 2014 Emerging Trends in Real Estate, US report.
Top universities: (1) Massachusetts Institute of Technology (MIT); (2) Harvard University; (79) Boston University; (331) Boston College; (204) Tufts; (324) Brandeis University; (397) Northeastern University.
Nearby: Boston is less than an hour’s drive from Brown University (47) in Providence, Rhode Island, and about two hours from Yale University (8) in New Haven, Connecticut.
Learn: Boston—technically, in adjacent Cambridge—is home to Massachusetts Institute of Technology (MIT) and Harvard University, the two most highly ranked earned spots in the top 500. It’s no wonder that the number of international students heading to Boston grew 10 percent in the 2012-2013 school year, according to IIE.
Earn: It’s currently a buyer’s market for condominiums in Boston. Competition for condos in South End, Beacon Hill and Charlestown—upscale neighbourhoods popular median condo price citywide shot up to USD525,000 in Q3 of 2013, 8 percent higher than 2012 according to LINK, a Boston company that tracks condo sales in 12 of the city’s neighbourhoods. Price growth in the luxury market is even more dramatic, increasing by more than 31 percent, to USD1.7 million, just shy of 2008’s USD2 million peak. Low inventory is partially to blame for the rapidly increasing prices, with low turnover for existing properties, and a slew of projects in the pipeline that won’t be available for a few years.
“Speaking as a Harvard graduate, Cambridge resident, and broker in Harvard Square, I can say that the market here is hot,” said Charles Cherney, vice president of Hammond Real Estate. “Limited inventory and high demand. The average sale price in Cambridge is 103 percent of the list price. Many properties receive multiple offers, and many buyers are cash buyers.”
Hot property: For those with students eying one of Boston’s universities, it’s smart to begin investigating property sooner rather than later. Millennium Place, a 15-storey, USD220 million luxury residential building in downtown Boston, is an ideal option for those looking at the high end of the market. It’s within walking distance to all five of the city’s MBTA lines and the South Station rail terminal, and will be available for occupancy this fall.
San Francisco Bay Area, California
Top universities: (7) Stanford University; (25) University of California, Berkeley (UCB)
Nearby: San Francisco is just over an hour away from the University of California, Davis (85) and an hour and a half from the University of California, Santa Cruz (307).
Learn: The two top universities in the San Francisco Bay Area are not actually in San Francisco: Stanford is in Palo Alto, 30 minutes south, and UCB is 15 minutes to the west. This is no deterrent for students from Asia, however: Half of Stanford’s international students hail from Asia, and they make up more than 65 percent of UCB’s international population.
Earn: The Bay Area is more than 600 sq km, though San Francisco itself comprises just 127 of them. San Francisco proper has been notorious for regulations that make building—and therefore, buying—new condominiums difficult, but some new buildings are popping up and options in nearby suburbs abound. Oakland, a suburb adjacent to both San Francisco and Berkeley, is becoming a more popular secondary market, as the city sheds its ne’er do well past and neighbourhoods become havens for young professionals and creative types. The condo market spiked 76 percent last year.
In Palo Alto, the median home price grew 21.9 percent from year-end 2012 to year-end 2013, and the market for condominiums was more robust than for single-family homes. Palo Alto is in the heart of Silicon Valley and close to high-profile tech headquarters like Facebook and Google, so it attracts a steady stream of young professionals.
Hot properties: The new luxury building in Hayes Valley, 8 Octavia, by award-winning architect Stanley Saitowitz, has topped off its eighth and final floor, and will be available for occupancy late this year.
Top universities: (9) University of Chicago; (29) Northwestern University; (192) University of Illinois, Chicago;
Nearby: The University of Notre Dame (224) is an hour and a half from Chicago.
Learn: The top-ranked universities in the Chicago area are on opposite sides of the city—the University of Chicago is on Chicago’s south side, while Northwestern is in Evanston, Chicago’s adjacent northern suburb, and are just as far apart in terms of the college climate. Though both are well respected and academically rigorous, the University of Chicago is known for being more traditional and conservative, while Northwestern has a reputation for being preppy and social.
Earn: From October 2012 to October 2013, Chicago home values rose 10.9 percent—the largest gain since 1988—according to the S&P/Case-Shiller index of property prices. In spite of the price surge, Chicago remains one of the most affordable major cities in America, and is the most affordable city on the list. At just USD21 per sqm, it’s less than half as much as the next lowest city, Los Angeles, which comes in at USD44 per sqm.
Hot properties: The Legacy at Millennium Park and The Heritage are good options for those looking to be near the southern part of the city. New-build condos are rare in Evanston, but existing buildings offer good value, and often end up being cheaper than University housing, even if the unit is sold in three to five years.
Los Angeles, California
Top universities: (10-tie) California Institute of Technology (Caltech); (40) University of California, Los Angeles (UCLA); (125) University of Southern California
Nearby: From L.A., you can get to both the University of California, Irvine (149), and the University of California, Riverside (268) in less than one hour. Learn: Sun and surf aren’t the only reasons students flock to L.A. Caltech and UCLA alone bring in almost 30,000 undergraduates a year, and 22 percent of the University of Southern California’s student body comes from abroad, the highest percentage of any university in the country (UCLA is also in the top 10, with 15 percent international students).
Earn: Like San Francisco, Los Angeles suffers from a lack of supply in the condominium market. Many projects that were started before the downturn only recently opened—and sold out quickly— and others were switched to rental units when the recession took hold.
Hot properties: The Ritz-Carlton, which opened in 2011, keeps some unsold units off public listing services, so it’s worth enquiring about even if you don’t see units advertised. Two new high-end apartment towers around Hollywood— The Huxley and The Dylan, named after the writers Aldous Huxley and Dylan Thomas—are schedule to be completed this spring.
New York City, New York
Top universities: (14) Columbia University; (44) New York University
Nearby: Yale University (8) is an hour and a half drive from New York City, and Princeton (10-tie) is one hour away. Rutgers University, New Brunswick, NJ (255) is just 40 minutes away.
Learn: The 2013 Open Doors Report on International Educational Exchange found that New York City is the most popular destination for international students, which is not surprising given its diverse cultural, entertainment and post-graduate job opportunities.
Earn: With the highest price per sqm of any major U.S. city, New York isn’t the place for bargain hunters. It’s an ideal spot, however, for those buying for long-term personal use, since both apartment rents and hotel prices are high. The market has remained relatively steady in the past year, and both median and average prices rose around two percent from 2012 to 2013. This year will see a slight increase in supply and new development, according to Jonathan Miller, preparer of the Elliman Report, which examined the last decade of Manhattan real estate, and could be a good time for buyers interested in new build homes to get in on the action.
Buyers who intend to rent out their units in the future may take a different tack than those buying for retirement or holiday homes, as small units—less than 90 sqm—tend to have higher rental yields than large ones.
Hot properties: The Savoy, Chatham, 108 5th Avenue, The Beekman Place and Trump Upper East Side are all popular with Asian buyers, according to Roy.