Foreign Money still Pushing in Strong
Years ago, no one in his or her right mind wanted to touch commercial real estate. Property valuation was in free fall. Years of gains were wiped out. And there were fears that values could fall another 50% from their peak, I once noted. Vacancies were soaring. Refinancing wasn’t an option. Lenders were dying off. Shopping center vacancies were roaring.
It was a disaster.
But as I’ve noted many times, commercial real estate is rebounding with no real end in sight. Nowadays, there’s no shortage of foreign interest. And lenders are more than happy to lend again. In the first quarter of 2015 alone, we’ve seen $24 billion of foreign capital flow into U.S. properties.
Now, we’re learning that global transactions in the U.S. have soared 30% in the second quarter of the year, according to JLL, a global real estate service firm, as reported by Investors Business Daily. Total volumes were up to $79 billion – an 18% jump year over year.
Better yet, China has already invested $5 billion in U.S. real estate this year. That’s about a billion more than what it invested last year. They’re expected to invest up to $12 billion this year alone.
Last year, China’s main investing focus was in New York, San Francisco, Boston, and Houston, as reported by Investor’s Business Daily. This year, though, Chinese investors are just beginning to expand into Seattle, Washington, and Hawaii.
I expect even better days ahead for commercial real estate.
But that shouldn’t come as a surprise. We’ve long talked about that.