According to an article in Bloomberg.com, foreign investors are expected to pour more money into US real estate this year compared to last year.
This outlook is based on a survey by the Association of Foreign Investors in Real Estate and shows that New York remains the most popular market worldwide. The survey showed that 64% intended to make modest or major increases to their investments in US property during 2016, while another 31% expect to maintain their investments or will reinvest the proceeds of sales into more assets in the United States. Out of all the respondents surveyed, none planned a major decrease in their investment and around half of the group’s 200 members participated in this survey.
Members of the Association of Foreign Investors in Real Estate hold about $2 trillion of real estate across the world. The recent immigration crisis in Europe, the economic slowdown in China and Brazil’s recession have all underlined the fact that for many foreign investors the United States is the safest place for them to hold assets.
Since the financial crisis foreign purchases of real estate in the United States have increased to $87.3 billion in completed deals for 2015 compared to less than $5 billion in 2009. Investors from Europe, Australia, Asia and Canada bought into shopping malls and hotels as well as apartment buildings, office towers and warehouses in anticipation of higher yields. Around 27% of the investments took place in Manhattan and were worth $23.5 billion in 2015, according to figures from Real Capital.
The survey also showed the US as holding top ranking for the best opportunity for price increases in 2016, ahead of Brazil, Spain, Ireland and the United Kingdom. After New York, London and Los Angeles were the second and third most popular cities for real estate investment. Berlin came in at number four which is the first time a German city has been in the top five. Fifth place was a tie between Paris and San Francisco. Industrial and multifamily real estate were the most popular types of property in the US for a second year with retail coming in third. Office properties were fourth while hotels came in at number five.
It’s expected that the recent legislation changes in taxes for foreign pension funds buying into US real estate will help boost investment even further. Previously many overseas investors would have bought US property with domestic majority partners but now the way is open for these investors to structure their deals slightly differently.