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Foreign Investment Looks to These 3 CRE Property Types

It should be no secret that foreign investment has been a large source of overall investments in the American commercial real estate market. This can be a testament to the strength and favorable returns that can be found in the U.S. market. The most foreign investment in commercial real estate is coming from China for a total of 29% of all foreign investment in the country that is approximately $19.2 billion of foreign money coming into the U.S from China. Coming in at second is Canada which invested $13.1 billion in the last year.

Let’s look at the types of property that these foreign investors are interested in so you can better market your properties to the right investors.

1. Mega Deals

When it comes to Chinese investors they have been doing it big. 62% of all Chinese commercial real estate investments last year were deals that were over $1 billion in size. These deals were mostly consisting of large portfolios of hotel groups. Most notably a $6.5 billion-dollar deal to acquire Strategic Hotels & Resorts which almost included the famous Hotel del Coronado (valued at $1 billion on its own).

From a CRE standpoint, larger deals and offerings should be marketed to these types of investors as they have the capital which is coming mostly from Chinese insurance companies.

2. Coasts Getting the Most

In terms of what regions in the United States are seeing the most foreign investment, it is typically targeted at the east and west coast’ s large cities with New York City taking the bulk of foreign investment. New York City alone, took 46% of the total amount spent by foreign Chinese investors and rightfully so as New York City continues to be the one city in the country that can provide the amount of entertainment, culture and accessibility you want at any level. This ensures that there is a constant high population that can sustain these investments by providing residents, companies and small businesses amenities they enjoy.

3. Office Space

The second top sector for foreign investment is office space and especially office space with in coastal cities. The allure of the office space in these regions is due to the high demand for city office space now that millennials are increasing the population and skilled workforce within the city. Foreign investment in office space jumped by $4 billion from $3.5 billion to $7.5 billion. In contrast, industrial investment has slowed down.

With numbers like this it is important that you are ensuring your property or properties are being marketed to all the possible investors. In other words, for some commercial real estate you may need to go global to get a full reach of the potential market. At CBC, we are looking at data like this constantly so that we can utilize an additional market of possible investors as soon as possible without having to start from scratch on research when it is too late.

 

-Nicole Epps Brzyski