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Foreign Real Estate Investors Flocking to the United States

Author: Scarinci Hollenbeck, LLC

Date: March 24, 2015

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The United States has regained its ranking as the world’s largest real estate investment market, according to Cushman & Wakefield’s annual global capital markets report International Investment Atlas.

Globally, real estate investment fell in 2014; however, the decline is solely attributed to decreased land sales in China.

Overall, investment in real estate in the United States totaled $324 billion, representing 16 percent uptick over the prior year. Within the U.S., the most popular target city was New York City with more than $61 billion in investments. It was followed by other gateway cities, including Los Angeles, San Francisco, Washington, D.C., Chicago, and Boston. The report also noted that millennials seeking the right “live/work/play environment” are spurring investment in Nashville, Brooklyn, Portland, and Memphis.

With interest rates projected to remain low and the overall economy expected to continue to improve, the United States should see additional growth in 2015. Overall, Cushman & Wakefield’s predicts global investment volumes will increase by 11 percent in 2015 to $1.34 trillion, led by Europe and the United States.

“In the U.S., leasing markets were slower to respond to the Fed’s stimulus than investment and finance, but they too are now rising and with supply tightening, growth pressures and development opportunities are emerging in a range of cities and sectors. The initial investment rush for core product in gateway cities has now long since been followed by a second and third wave of capital looking to develop in these same top markets or to spread towards second-tier, decentralized or higher risk markets,” stated Janice Stanton, a senior managing director in Cushman & Wakefield’s U.S. capital markets group.

In the hottest U.S. markets, including New York City, the increased competition will likely impact the bargaining power of buyers, both foreign and domestic. Investors may be forced to look for properties outside of their traditional comfort zones and assume more risk in the transactions. Of course, this does not mean that they should abandon smart investment strategies, such as conducting due diligence and negotiating favorable contract terms.

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Foreign Real Estate Investors Flocking to the United States

Author: Scarinci Hollenbeck, LLC

The United States has regained its ranking as the world’s largest real estate investment market, according to Cushman & Wakefield’s annual global capital markets report International Investment Atlas.

Globally, real estate investment fell in 2014; however, the decline is solely attributed to decreased land sales in China.

Overall, investment in real estate in the United States totaled $324 billion, representing 16 percent uptick over the prior year. Within the U.S., the most popular target city was New York City with more than $61 billion in investments. It was followed by other gateway cities, including Los Angeles, San Francisco, Washington, D.C., Chicago, and Boston. The report also noted that millennials seeking the right “live/work/play environment” are spurring investment in Nashville, Brooklyn, Portland, and Memphis.

With interest rates projected to remain low and the overall economy expected to continue to improve, the United States should see additional growth in 2015. Overall, Cushman & Wakefield’s predicts global investment volumes will increase by 11 percent in 2015 to $1.34 trillion, led by Europe and the United States.

“In the U.S., leasing markets were slower to respond to the Fed’s stimulus than investment and finance, but they too are now rising and with supply tightening, growth pressures and development opportunities are emerging in a range of cities and sectors. The initial investment rush for core product in gateway cities has now long since been followed by a second and third wave of capital looking to develop in these same top markets or to spread towards second-tier, decentralized or higher risk markets,” stated Janice Stanton, a senior managing director in Cushman & Wakefield’s U.S. capital markets group.

In the hottest U.S. markets, including New York City, the increased competition will likely impact the bargaining power of buyers, both foreign and domestic. Investors may be forced to look for properties outside of their traditional comfort zones and assume more risk in the transactions. Of course, this does not mean that they should abandon smart investment strategies, such as conducting due diligence and negotiating favorable contract terms.

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