Who Are Investing in US Real Estate Markets from Overseas?

Posted on August 12, 2011

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The North American real estate market continues to present themselves as probably the most attractive real estate investment market in the world, but with global recession in place, the arena of international investors have been changing.

So, who are leading the race in investing into the US real estate markets, in terms of institutions and what are they buying? You may see some old and new ideas from this article.

Who are benefiting the most from weakness in USD. Euro Zone was doing well until they started facing their own debt-crisis with Euro fallen significantly in its value and impacted on the investment ability of many European institutions.

The following are where recent reports and surveys have found:

Canadian institutions are snapping up properties across East Coast very fast – so far, there has been steady acquisitions from Canadian banks, Canadian funds, Canadian real estate companies. The institutions so far have been more focused in the east coast cities, mainly New York City, Boston, Chicago, but also in Florida as well. Canadian investors have acquired commercial, industrial, shopping centres and also some hotel developments – as CAD continues to climb against USD which may reach parity very soon, this trend should not stop in the short term.

Germans continue to show strong support in US properties, German investors are always long term property investors; and they are one of the major property owners around the world. German institutions are mainly interested in office & other commercial assets, they are often looking for A Grade or Premium Grade facilities, some are often leased back to major German institutions as anchor tenants such as Dutsche Bank, BMW and SAP. German investment firms have been repackaging American assets into their regional-specific real estate funds, and they currently rank 2nd most active foreign investors in US, just behind Japan.

Japanese investors are still very active, and with economy finally on recovery road; as well as relatively low investment rental yield; Japanese institutions are find American properties of great value. Similar to strategies described above, a lot of Japanese institution owned properties are leased to major Japanese corporations, this actually give the owners more confidence in some cases.

Korean investors are relatively new investors in North American assets, although individual investors have been investing in American properties for over 25 years now. Korean investment funds including its sovereign funds have bought a number of major premium grade buildings in major US metropolitan areas such as Chicago, New York. Also, notably, Korean individual investors have been very active in Atlanta and Texas; some of the major shopping malls are being built by Korean investors supported by Korean banks back in Korea.

Israeli investors are also coming into US assets for the first time, led by Israeli institutions. So far, investments have been around key commercial centres in US, mainly New York City and other assets. Investments have been quite diverse, ranging from commercial towers to some specialty properties such as medical centres and new business parks.

Chinese banks – Chinese banks are finally starting making their moves offshore, and at grand style. We had reported that Chinese banks have recently completed a multi-billion dollars in UK in redevelopments of parts of London.

The Chinese banks are also expanding their presence in United States, lending are likely to be provided to residential developments as well as shopping malls; so far, these activities are mainly concentrated in LA, San Francisco, New York City and Silicon Valley where there are large presence of Chinese communities. However, as all major Chinese banks are now public listed companies, many are listed on NYSE, it is widely expected they will be as active as Japanese investors in 3 to 5 years time.

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