Corfac News

There was an interesting article in GlobeSt this week about Foreign investment in Commercial Real Estate. Kerry Vandell, director of the Center for Real Estate at UC Irvine spoke to GlobeSt about who is investing, where, and in what sectors.

Who? “Traditionally, at least in recent years, Canada has been the largest foreign investor in US real estate, but there’s been a real increase by the Asian countries and the various funds from those countries. China and Russia have become big players, Singapore through its sovereign wealth funds, Malaysia and Australia. And Norway has recently become one of the largest investors in US real estate through its sovereign wealth fund. Countries are making use of their oil revenue and trying to put 5% into real estate—and more in US real estate recently.”

Where? “Traditionally, most of the foreign money allocated for US real estate has been invested in gateway cities like New York, San Francisco and Washington, DC, but more recently we’ve seen an increasing proportion in Houston, Los Angeles and Miami (which has a Latin American flavor to it), and they’re talking about some of the money going into Austin and other knowledge and tech centers like Silicon Valley. If you’re focusing on California, the biggest amount historically was in the San Francisco area at first, then Silicon Valley, but more recently Los Angeles is coming in from a variety of sources and sectors. This also includes the Greater Los Angeles area of Orange County.”

Which Sectors? “When you look at the sectors, you might think of the high-end, triple-A office buildings, but foreign investment has moved substantially beyond that. Last year, a lot of foreign money went into multifamily, and this year it has been on less jazzy industrial properties. For the most part, these are not class-B properties (they are investment grade. They’re moving more into value-add a little bit, but they’re typically investing for the long haul—they’re not flippers by any means. They’re bidding down cap rates by this activity, and class-A cap rates in some major cities are below 4%.”

Read the whole article and see what else Vandell talked about: http://www.globest.com/news/12_986/orangecounty/acquisitions_dispositions/What-Drives-Foreign-Investors-to-US-Real-Estate-352423.html?zkPrintable=1&nopagination=1.