Three Reasons Why Foreign Capital will Continue to Flow into U.S.
There may be countless arguments for slowing growth in commercial real estate. But to be completely honest with you, I’m not buying it… In recent months, Morgan Stanley noted U.S. commercial real estate prices would be flat in 2016, as compared previous forecasts for 5% growth.
Analysts are also concerned that income generated from such properties won’t be enough moving forward to keep investors happy and help maintain returns, in an uncertain environment of slowing earnings, and potential recession, as noted by Bloomberg.
The Urban Land Institute just noted nationwide commercial real estate activity is expected to fall over the next three years with prices likely to grow at a slower rate. The group expects for volume to decline over the next three years to $475 billion in 2018.
That’s down from $525 billion in 2016.
But again, I don’t buy into the fear.
With a high likelihood of continued low interest rates and a number of high-yielding opportunities, foreign investors will increase their exposure. Most notably, Chinese investors will continue to invest in US property as Chinese real estate markets implode…
And it’s very likely that U.S. real estate will continue attracting a great deal of attention and capital from global investors for added security, diversity and overall stability…
When it comes to security, hotspots like the U.S. are strong and reliable. With such low interest rates, our market is seen as a safer place to park cash with lower overall risk. Not only that, but changes to FIRPTA in 2015 have made investing easier and a bit more attractive.
As all investors are aware, diversity is key to success.
You never want to put all of your eggs in one basket. What that means is diversify.
In order to reduce overall risk, it’s essential that you spread money around different types of investments. In real estate, we can diversify with multiple properties, for example. This prevents an investor from sinking all capital into one investment, which increases risk.
An investor can diversify by property type and transaction type, too.
And finally, all investors want to minimize their risk. By investing in U.S. property for example, foreign investors can find steadier yields that offer higher rewards in such volatile times.
What’s next for commercial real estate and foreign investments? Stay tuned for more updates and hot trends right here at RayatReport.com in this ever-changing economy.