Watch for these 6 CRE International Business Trends
Recently, the National Association of Realtors (NAR) released their report on the commercial real estate trends for the international side of the business. It is no secret to those involved in the commercial real estate sector that international investment in the United States has been growing over the last few years, so it is essential to understand what these investors are doing and what trends are developing. Here are some of the trends to watch out for from NAR’s report.
1. Interest in Secondary Markets
While international investment in the United States in 2016 was down overall, investment in secondary markets from international investors is up. Investment from international sources accounted for 10% of the overall investment in these markets. This is not surprising as these markets have increased in popularity due to their lower cost of living for residents. As the primary markets have skyrocketed in price it has opened up the secondary markets as people are still looking for a live, work, play environment at a lower price.
2. 20% of Transactions Involved International
For the survey, 20% of respondents closed at least one sale that involved an international buyer or seller. At this percentage, it shows that international investors are still very interested in the United States market. This is roughly the same percentage as the previous year.
3. Sectors Favored
While international investors started to increase their interest in secondary markets their primary focus still remained in major cities. Specifically, in these primary markets, the concentration was on hotel, office and developments. This is surprising to see, as office demand has been declining a bit due to the increase in remote workers and the flexibility that has been created for what a defined workspace can be.
4. Trending States
Which states are seeing the most international dollars? From the survey, some expected states like New York and California are on the list but in the top 2 are Florida and Texas. Continuing the Southern State trends, also included in the top 10 are Alabama, Mississippi and Arizona.
5. Future Outlook
While the commercial real estate market saw a bit of a slowdown from international investment due to some turmoil and uncertainty in the market there is still positive views from the survey respondents. From the survey, 40% of agents believe that buyer activity will increase.
6. Where is the Money Coming From?
International investors are investing from all over but the most transactions are coming from Chinese investors. With uncertainty in the Chinese market, the United States real estate is more stable for these investors to put their money into. Behind China, Mexico had the second most transactions noted by the survey and rounding out the top 3 was the United Kingdom. The United Kingdom transactions can be attributed to Brexit which created uncertainty in the UK market.
For commercial real estate professionals, marketing to this demographic of international investor can be a great business strategy. What are you doing to ensure you’re available to these types of clients?
Written by Nicole Epps Brzyski for Coldwell Banker Commercial Affiliates