{"id":1004606301,"date":"2022-10-11T02:57:34","date_gmt":"2022-10-11T10:57:34","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004606301"},"modified":"2025-02-26T06:15:33","modified_gmt":"2025-02-26T14:15:33","slug":"foreign-cre-investors-weigh-opposing-forces","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/","title":{"rendered":"Foreign CRE Investors Weigh Opposing Forces"},"content":{"rendered":"
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New York City skyline. Image by ben o’bro via unsplash.com<\/p><\/div>\n

International geopolitical and economic uncertainty has solidified the standing of the U.S.<\/a> as a port in the storm for foreign investors in commercial real estate. History\u2019s third-highest cross-border volume year came in 2021, when in spite of persistent pandemic-related angst $62 billion was invested in all U.S. property types. But investment pace has slowed greatly in 2022, with rising interest rates adding to debt market volatility.<\/p>\n

\u201cNevertheless, some foreign investors utilize all cash or low-leverage strategies, and therefore have been able to deploy capital despite the volatility,\u201d said Riaz Cassum, capital markets global head of international capital coverage at JLL<\/strong>.<\/p>\n

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READ ALSO<\/strong>: These Factors Could Jumpstart CRE Transactions<\/a><\/p>\n

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At present, international investors are trying to balance two countervailing forces, said Loryn Arkow, a partner in the real estate practice at Stroock & Stroock & Lavan<\/strong>. On one hand, the U.S. market\u2019s attractiveness as a comparatively safe haven has grown even more appealing at a time of economic uncertainty and an Eastern European war. That has to be weighed against the U.S. dollar\u2019s appreciation vis-a-vis many foreign investors\u2019 currencies, which has made U.S real estate more expensive.<\/p>\n

Hottest types<\/strong><\/h2>\n

Industrial and multifamily assets appear to be of greatest interest to foreign investors, with life science, self storage and student housing also spurring interest. Cross-border investment interest has also been seen in gateway market Class A office and select suburban office properties.<\/p>\n

\u201cCompanies are looking to earn their employees\u2019 commute and are looking to reduce square footage but improve the experience,\u201d said Jahn Brodwin, co-leader of the real estate solutions practice, and senior managing director at FTI Consulting<\/strong>. \u201cThus, a big push to highly amenitized Class A office and upscale suburban locations near where employees live\u201d among foreign institutional investors.<\/p>\n

According to the Q2 2022 MSCI US Cross-Border Investment Compendium, cross-border investment volume has averaged 8 percent of total acquisition activity over the past year. That followed 2021\u2019s bifurcated results, which saw cross-border at 6 percent of the total in the year\u2019s first six months, but the second half higher at 10 percent.<\/p>\n

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READ ALSO<\/strong>: 2022 Top Commercial Real Estate Brokerage Firms<\/a><\/p>\n

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Foreign investors attempting to land assets in the industrial sector found competition stiff through the course of the pandemic. More recently, the industrial sector has softened a bit, Arkow said. \u201cSo, time will tell whether international investors will, given currency effects, look to acquire more industrial assets in the near term,\u201d she reported.<\/p>\n

Other experts see a flight to quality. Foreign investors are looking for Class A, main on main, newly built assets, and a greater inclination toward red business-friendly rather than blue states. \u201cThat\u2019s usually what happens when the market takes a negative turn,\u201d said Ran Eliasaf, founder & partner of Northwind Group<\/strong>. \u201cInvestors are reacting to the prospects of regulation. When they see laws pass at a faster pace, that will deter them.\u201d<\/p>\n

Attractive regions<\/strong><\/h2>\n

Foreign investors\u2019 allocation by region has changed since the pandemic\u2019s worst days. Robust international capital being injected into Sun Belt and secondary growth markets reflects a preference among foreign investors for industrial, multifamily and alternative property types often concentrated in non-gateway markets \u201cwith demographic and population tailwinds,\u201d said Cassum, adding foreign investment into the Dallas market is up substantially vis-\u00e0-vis five years ago, driven by Canadian and Singaporean groups.<\/p>\n

For years, New York City and other gateway markets gained greatest favor from foreign investors. Over the past two years, Atlanta, Austin, Dallas and Boston have gotten the nod. \u201cThese are markets with younger demographics, greater affordability and cities with tech and med-tech\u201d concentrations, said Gunnar Branson, CEO of Afire Group<\/strong>.<\/p>\n

Stepping up<\/strong><\/h2>\n

Interest in U.S. commercial real estate investment is coming from virtually every corner of the globe. Across continents, pension system officials seeking investment diversity as well as reliable, consistent growth want to acquire U.S.-based assets, said Branson. He specifically cited the pension plans in Canada,<\/a> Japan and the Netherlands. Reason: \u201cYou have so many cities with a depth of institutional real estate to invest in, compared to, say, England or France, each with one or one and a half,\u201d he explained.<\/p>\n

In addition to Canadian private equity funds, South Korea, Singapore and Israel are also investing, Eliasaf reported.<\/p>\n

High among foreign investment magnets is the Miami area. There, half the rich condo projects on Fisher Island are owned by Russians, and Doral is dubbed \u201cDoralezuela\u201d for the number of Venezuelans investing there, said Matt Rotolante, president of Lee & Associates<\/strong>\u2019 South Florida office. European investors, as well as those from Central and South America, are keen on the market. Argentina and Venezuela investors historically pumped in funds; more recently, it\u2019s been Peruvians and Chileans. \u201cWe also see a lot of money coming in from Saudi Arabia, as a result of the new LIV Golf,\u201d he said.<\/p>\n

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READ ALSO<\/strong>: What a Stagflation Scenario Could Mean for REITs<\/a><\/p>\n

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Latin Americans not only see Miami as a haven for their wealth, but for their families, he added. They choose Miami because a countryman of their acquaintance lives there. After buying a condo, they look to invest in a strip retail center or a warehouse. \u201cAfter the first few deals, we see them start graduating to greater value,\u201d he said.<\/p>\n

Year ahead<\/strong><\/h2>\n

Looking ahead to 2023, there\u2019s clear expectation international investors will once more actively invest in the U.S. market, particularly in industrial and multifamily real estate. \u201cDry powder from cross-border investors earmarked for U.S. commercial real estate remains high,\u201d based on the size and diversification of the U.S. market, Cassum said.<\/p>\n

Keep an eye on ESG, which is only becoming more important to foreign investors with every passing month. \u201cThink about the properties that performed well in the hurricane,\u201d Branson said. \u201cA lot of them were the newer, more energy-independent properties.\u201d<\/p>\n

In the short term, Eliasaf is among the more pessimistic observers.<\/p>\n

\u201cI think we\u2019re heading for a big correction in value,\u201d he added. \u201cEventually it will create opportunities. But it will be a painful road to get there.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

While the strong dollar makes acquisitions costlier, the U.S. offers a safe haven from geopolitical upheaval.<\/p>\n","protected":false},"author":450,"featured_media":1004536444,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21748,16,21783,21754,23891,21742,21747],"tags":[51579,37237,32796,32762],"class_list":["post-1004606301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-industrial","category-international","category-investment","category-medical-office","category-national","category-latest","category-office","tag-afire","tag-fti-consulting","tag-jll","tag-lee-associates"],"acf":[],"yoast_head":"\nForeign CRE Investors Weigh Opposing Forces - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Geopolitical, economic uncertainty solidified the standing of the U.S. as a port in the storm for commercial real estate foreign investors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Foreign CRE Investors Weigh Opposing Forces\" \/>\n<meta property=\"og:description\" content=\"Geopolitical, economic uncertainty solidified the standing of the U.S. as a port in the storm for commercial real estate foreign investors.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2022-10-11T10:57:34+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-26T14:15:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/NYC-skyline.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"820\" \/>\n\t<meta property=\"og:image:height\" content=\"568\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Jeffrey Steele\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/\",\"name\":\"Foreign CRE Investors Weigh Opposing Forces - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/NYC-skyline.jpg\",\"datePublished\":\"2022-10-11T10:57:34+00:00\",\"dateModified\":\"2025-02-26T14:15:33+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/d331e0059e00242bd623aa07925cd418\"},\"description\":\"Geopolitical, economic uncertainty solidified the standing of the U.S. as a port in the storm for commercial real estate foreign investors.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/foreign-cre-investors-weigh-opposing-forces\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/NYC-skyline.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2021\/05\/NYC-skyline.jpg\",\"width\":820,\"height\":568,\"caption\":\"New York City skyline. 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