Business, Money Matters

Foreign Investors Still Flock to US Real Estate

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Foreign real estate investors have long had a love affair with U.S. real estate and figures for the first half of 2017 show that there is no sign of a slow down. This means that the U.S. real estate market is the top recipient of international capital by attracting $19.8 billion in investment.

According to reports with JLL’s H1 2017 U.S. Investment Outlook, the current rate of 2017 is just below that of  2016, with  a whopping $55.1 billion of foreign national investment by year-end. Even so, the rate of such investment remains significant and consistant.

“For some investors, this is combined with limited investment options in their domestic markets,” says Sean Coghlan, Director, Americas Research, JLL. “Uncertainty over the economic climate and prospects in the European Union, especially as Brexit plays out, is another factor. At the same time, foreign pension and sovereign wealth funds continue to increase their allocations to real estate, while the relaxation of restrictions on outbound investment by some countries has helped stimulate foreign capital flows.”

While the flow of this investment remains quite steady, the sources of the inbound capital are subject to change according to economic shifts and world events. “Historically, Canadians have been the most active foreign investors in U.S. real estate, but now investors from Germany and Asia Pacific have started to make strides,” says Coghlan.

Canadian capital accounts for 30% of foreign real estate investment in the U.S. making it the largest single source of foreign investment but Asia countries combined are now comprising almost 50% of the real estate investment. Seven of the top ten foreign investors were Asian based with the office sector and coastal markets being their main focus. 

Just under 80% of the office building investment came from China, Singapore, Canada, Germany and Japan. 

Multifamily units come in second as the next biggest recipient of foreign funds

As the real estate market continues to rise, it is likely that foreign investors will expand their focus and take a more diversified approach to their U.S investment strategies including both property type and location. 

There has been a shifting of focus over the past few years sending additional investment into relatively new markets for such foreign attention. In 2014, 71% of such investment came into primary markets with that figure now at 58%. This means that a substantial amount of money is being deployed in new and alternate sectors and markets including student housing and medical office facilities. 

 

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real estate, investment, live in the US, foreign investment