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International Investment in the U.S. CRE Market - What Does It Mean for Local Investors?
According to data from the National Association of Realtors (NAR), nearly one-fifth of realtors closed a sale with an international client in the year 2017. Moreover, a total of 35 percent of realtors stated that they have seen an increase in the number of international clients over the past five years. What does all this mean for local commercial real estate investors, and how can you ensure future growth of your real estate portfolio? The following information explains.
Foreign Investing - Good or Bad for Local Investors?
At first glance, it might appear that foreign investments are negatively impacting local investors, but that is not necessarily the case. Market trends showed an acceleration for the last quarter, with a 9.1 percent increase in sales volume. Granted, investors are still concerned over the shortages of available inventory, and wide pricing gaps between buyers and sellers are still an issue. Yet, when one considers that cap rates closed at 10 basis points higher than 2016, it becomes clear that the CRE market is still growing and expanding. In short, the uptick in foreign investment may mean more competition in the CRE industry, but the savvy investor could potentially use this influx to his or her advantage.
Capitalizing on the Increase of Foreign Investment
About seven in 10 of the NAR survey respondents said that foreign investors feel the U.S. market prices are either equal to or less expensive than those in their home country, so they feel they are getting a “good value” for their money. Local investors can use this knowledge in their negotiations with foreign investors. Some may even feel it is beneficial to work specifically with parties overseas. Just keep in mind that they are mostly targeting smaller transactions (the median international buyer transaction fell at about $975,00 and seller transactions hit a median of about $1 million). Also note that buyers are mostly from China, Mexico, and Canada, and sellers are mostly from Mexico, Brazil, and Israel. These may be the markets you target if you wish to get in on international investment during this time of foreign growth.
Contact Our Naperville Commercial Real Estate Lawyers
Knowing when and where to invest in the commercial real estate market is only half the battle. One also needs an advocate on their side, protecting their interests. Lindell & Tessitore, P.C. can help with everything from assisting with the due diligence process to negotiating better contracts. Spend your energy on what matters most and leave the rest up to our Naperville commercial real estate lawyers. Call 630-778-3818 and schedule your personalized consultation today.
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1730 Park Street, Suite 117, Naperville, IL 60563
630-778-3818
