MIAMI—Foreign investment into US commercial real estate continues in 2015. According to the Association of Foreign Investors in Real Estate’s 2015 survey, over 90% of respondents plan to maintain or increase the size of their US portfolios in 2015—and the US was voted the most stable and secure country for investment, with the best opportunity for capital appreciation by a wide margin.
“As it periodically has been in the past, the United States is currently the target of much of the foreign investment in real estate globally,” says Thomas Arnold, AFIRE chairman and head of Americas real estate at the Abu Dhabi Investment Authority. “With a stable and transparent market and an economy that appears to be steadily improving without the fits and starts experienced in other regions, the US has become the first stop for foreign real estate investors. And with the continued creation of wealth in China, it is not surprising that they, along with other nationalities, are voting with their ‘dollars.’”
Industry players say net lease properties are a beneficiary of the foreign investment trend. Jason Fox, head of global investments at W. P. Carey, a global net lease REIT, tells GlobeSt.com foreign investors still actively pursuing net-leased assets, either independently or through American partners and advisors despite the rising strength of the US dollar.
And Jon Graber, a director at Franklin Street, tells GlobeSt.com he’s seeing the most interest from syndicators and private buyers from South America: “We have handled the successful sale of several triple net assets from investors in Argentina and Brazil but have also sold property to groups from Canada and Europe as well. Foreign investors look at opportunities differently than domestic investors and see the US as a safe haven for the capital.”
Meanwhile, Marcus & Millichap commercial real estate broker Alex Zylberglait, who specializes in the sale of Miami properties ranging from $1 million to $20 million, says the starting point for private foreign investors is often net-leased assets: “Many of them do have a preference for single-tenant net-leased properties, especially when they are just getting into the US markets as they generally don’t require much in terms of management. In addition, they like the perceived safety of investment grade tenants on long-term leases.”
What about the rising strength of the US dollar? Even though returns may be higher in their home countries, foreign investors are still choosing to invest within the borders of the United States, David Sobelman, executive vice president and managing partner at Calkain Cos, tells GlobeSt.com. “Like any macroeconomic adjustment there will be a period of pause and reflection, but it’s clear that US real estate, and specifically the US net lease investment market, is the most stable in the world,” he says. “That will not go unnoticed, regardless of where the investor originates.” Here’s more on how the rising dollar impacts the net lease market.