is holding it’s next conference in China. Labeled as an Outreach Conference, it’s being held in Beijing at the Peking University Law School. This could very well signal an upcoming surge in Chinese investments in this country.
The conference will concentrate on educating Chinese institutions and investors on U.S. real estate and the U.S. markets. The intent is further stimulating an already strong demand for the U.S. real estate market by Chinese investors.
The agenda provides an overview to the U.S. economy in general. It then breaks the whole market into regional markets and next into the individual commercial sectors of office, multifamily, industrial, and retail properties.
Next, will be a comparison and contrast of the Chinese and U.S. markets. Specifically highlighted is the ease with which commercial real estate can be acquired in the U.S. compared to China. A demonstration of a typical U.S. transaction will be presented to emphasize this point.
The transaction demonstration will be followed with information about how typical investors structure debt and equity in the U.S. market. Finally, Chinese investors will be provided with information regarding tax implications when foreigners invest in U.S. commercial real estate.
These types of events are being held with more and more frequency. Recently another one was held in Los Angels where the focus was both on our real estate markets and the EB-5 Immigrant Investor Program.
In 2011, the Chinese spent more than $8 billion on U.S. real estate, which was a 24 percent increase over 2010. Chinese investments have been steadily increasing for years. Because of the EB-5 Immigrant Investor Program, they have a strong interest in commercial real estate. Numbers from Real Capital Analytics show the strongest interest in residential properties, hotels, golf courses, clubs, land, industrial warehouses, office buildings, and shopping centers.
Domestic investors are going to see both increased competition from foreign investors as well as a chance to profit by selling properties they currently own to the Chinese and other foreign investors.
According to the results of the 19th Annual Survey released by the Association of Foreign Investment in Real Estate (AFIRE), international buyers favor US property. As foreign investors notice a recovering economy, they are expressing a renewed interest in U.S. real estate. In the latter part of 2010, this real estate survey was conducted among association members. The James A. Graaskamp Center for Real Estate at the Wisconsin School of Business handled the project.
19th AFIRE Survey
Industry leaders are bound to pay close attention to this latest survey by AFIRE with its 180 members representing 21 countries. The survey received responses from members holding more than $627 billion in global real estate and $265 billion in U.S. property. More than 60% of responses named the US as the best potential for capital appreciation. At least 72% of foreign buyers revealed that they plan to increase their US investments in 2011 compared to 2010 transactions.
AFIRE’s 19th Annual Survey holds significant weight. The numbers reflect the opinions and plans of an influential group holding a considerable stake in global and regional assets. The 2010 results are far more encouraging than previous dismal numbers.
In 2006, only 26% of international investors saw potential in US property. Now more foreign buyers recognize the chance for capital appreciation in this country. Actually, the 2010 survey showed the strongest faith in this nation’s real estate in the past decade.
Leading U.S. Cities
Two US cities – New York City and Washington – outshone other global cities in this recent AFIRE survey. In fact, New York City replaced London as the number one choice for foreign investors in real estate during 2011. Since 2001, London has held either first or second place. With the latest AFIRE results, London dropped to third place – behind the Big Apple and Washington – just before Paris in fourth position. Ian Hawksworth, AFIRE chairman, is not surprised by London’s drop in rank.
“…In the last downturn, London was the first market to recover, and whilst investment in the UK Capital is still very active, it is not surprising that London has dropped to third place as investors expand their search to higher yielding markets such as U.S. gateway cities that offer attractive risk adjusted returns,” says Ian Hawksworth, chairman of Foreign Investment in Real Estate.
NYC tops London for real estate investors.
U.S. Cities Lead Way for Global Foreign Real Estate Investment
The popularity of NYC and Washington real estate is not a big surprise.
Surprising statistics came to light about preferred U.S. property types for investment. Multi-family homes, apartments, retail, and hotels are the top four favorites among foreign investors. Offices ranked lower and industrial spaces showed up as the least favorite. Usually, offices are the top pick of institutional investors.
The drop in popularity of office space might be tied to high unemployment rates. Although there is growth in employment numbers, buyers could be feeling somewhat uncertain about investing in offices and industrial property. Yet foreign investors have overall confidence in the U.S. real estate market. Investors interested in U.S. cities quadruple the number of foreign buyers wanting to invest in the UK.