Where did all the foreign money go?
Foreign investors have invested at record levels of U.S. properties in 2015, that spending has been slowing down as commercial real estate prices have been increasing. Chinese and Canadian companies where the two biggest purchaser U.S. properties setting records in 2015. One of the biggest investors was Chinese company, Anbang Insurance Group which acquired Manhattan’s iconic Waldorf Astoria hotel for $1.95 billion. Chinese and Canadian investors remain the leading sources of foreign capital, together accounting for $31.6 billion, or 44 percent, of all the acquisition volume in U.S. commercial real estate, RCA said. The next closest country was Germany with $5.6 billion. Foreign money and there demand in 2015 was one of the major factors in the growth of property prices in major American cities.
It was in the latter half of 2016 that the cutback by foreign investors began and has enhanced through this year of 2017. The high value of the U.S. dollar has made it harder on foreigners to acquire properties and political doubt has caused foreign and domestic investors hit pause for the moment. However, most analysts say the high prices for U.S. commercial real estate is the single biggest cause of the withdraw.
Foreigners are still most active in America’s six gateway cities which are New York, Boston, Los Angeles, Chicago, Washington, DC, and San Francisco. Manhattan is by far the frontrunner, followed by San Francisco and Los Angeles. Foreign buyers are also investing out into about 20 other major cities, where properties are more realistically priced and the yields are often higher. We have seen this ebb and flow before, it is cyclical and it will comeback.
Your Authority in Commercial Real Estate,
Otto Sevilla is an advisor, investor, and entrepreneur. He has been a dynamic participant in the real estate and finance industry for over 13 years. His knowledge of site selection, leasing, development, investment, acquisition, and acumen in negotiating complex commercial real estate transactions have distinguished him in the field. He has advised local, national, and international companies as well as property owners alike on developing and executing their strategic real estate plans. He has been involved with over $400 million dollars worth of assets and successfully represents more than 1 million square feet of commercial property space.