Foreign Ownership is stepping back into U.S. commercial real estate as a recovery in property values takes root and acquisitions gain steam.
Permanent private ownership and the market adjustment in the last five years makes it a good time for well funded people to take advantage of market conditions.
The U.S. represents a good value for a rapidly globalizing Chinese investor, in particular. Growth in the number of well-off mainland Chinese, an increase in overseas study by their children, and a drop in U.S. property prices are leading to greater ownership of U.S. real estate by buyers from China.
What are they buying and where? How can U.S. developers and other sellers connect with Chinese buyers? Importantly, a lot of investors have some level of self- use intention for their private ownership, whether it’s a business connection, a children’s education connection, or an immigration intention connection. In terms of the clients who’ve transacted, 60% + have an education connection. Education is a huge driver.
There is growing interest in investment and ownership in U.S. commercial properties among Chinese. It’s going to grow substantially, because the U.S. commercial market has some stress and difficulties, and it’s going to create opportunities. There is a trend of emergence (of demand) on the commercial side.
“Everybody feels more comfortable about the future so they’re starting to increase their investment” in commercial real estate, says Chris Macke, senior real estate strategist for CoStar: He said while foreign investors typically invest first in major U.S. cities such as New York, San Francisco and Washington D.C., they are likely to venture into ownership in other markets amid an improving global economy.
For instance, direct foreign investment in domestic real estate grew to 4.2% in 2010 up from 1.9% during the height of the market in 2007.
Last year, Canada and Israel had the most invested in the U.S.
The number of planned U.S. real estate deals by foreign investors so far this year already surpassed the number of completed deals in 2010. According to a February survey by the Association of Foreign Investors in Real Estate, more than 70% of foreign investor respondents plan to invest more capital in U.S. real estate than they did in 2010. What’s more, respondents ranked the U.S. as the country where they expect the most increase in the value of their property investments in 2011.
Most people think the U.S. real estate market is coming off the bottom and values are rising. Foreign institutions believe the U.S. is in the early stage of a recovery, and permanent private ownership is important.
Demand is way up from three years ago. Property values have increased dramatically. More institutional investors are seekingownership>”> ownership of stable core properties so values are moving up.”
Whether you have domestic or foriegn ownership, now is the time to invest.
US Real Estate Trends