Will 2011 See the Return of Foreign Buyers into US Property?
Pension & Investment Online reports: Pension & Investment Online’s Arleen Jacobius recently provided an overview, including interviews with some of the commercial real estate industry’s best, of the prospects for foreign investment into the US during 2011. One of the article’s largest observations was that foreign buyers—particularly pension and sovereign wealth funds—have been investing heavily in US commercial real estate, but have also been doing so under the radar via equity investments. Ms Jacobius profiled a number of recent reported equity deals done by foreign entities in partnership with US funds such as TIAA-CREF and AREA Property Partners. The article also made note of the recent Association of Foreign Investors in Real Estate survey, which found that foreign investors are extremely keen to get into the US market before it recovers strongly in the next few years.
On the other hand, the article’s other main point focused on the lackluster level of direct investment by foreign buyers into the US. According to data aggregated by Real Estate Analytics, cross-border buyers have accounted for only around 10% of total transaction volume annually over the past decade. RCA Managing Director Dan Fasulo added that, “Most investments by foreign institutions are made through REITs and commingled funds, which are not tracked.” Current federal US laws have provided a barrier to foreign investors seeking to purchase US assets outright, though many Canadian and European buyers have overcome these obstacles to become the top buyers of US property in recent years. And the article pointed out that, unlike the previous two years in which foreign buyers have only sought properties in the US’ leading markets, cross-border buyers are expected to be increasingly shopping in less-visible markets this year. Including Boston, Houston, Atlanta, San Diego, and Seattle, these extra purchases should raise their share of acquisition volume.
View the full article on Pension & Investment Online: Will 2011 See the Return of Foreign Buyers into US Property?
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Posted by: Nina Turner