NEW YORK CITY — Whether it be multifamily properties in secondary markets or trophy assets in gateway cities, the world's largest and most liquid market for commercial real estate investment is the United States. According to Jones Lang LaSalle's (JLL) International Capital Sources report, the U.S. closed more than $38.7 billion in foreign real estate investments during 2013 — a 40 percent increase over 2012.
Canadian, Chinese and Australian investors led the way for investment in the U.S., and they're not the only ones. Fresh new sources of capital are eyeing the U.S. with bigger appetites than ever before.
“Every year, we break a new record for foreign investment into U.S. commercial real estate,” says Steve Collins, international director at JLL. “International capital is plentiful, placing money into markets across the spectrum including Manhattan, Los Angeles, Chicago and other top-tier cities. But even select secondary markets such as Dallas, Houston and Seattle are getting in on the game.”
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According to JLL's Global Real Estate Transparency Index, two big factors are driving foreign investment in the U.S. — increased allocations to international pension funds in countries such as Australia and Malaysia and the tremendous rise of Ultra-High-Net-Worth Individuals (UHNWI) in Asia Pacific seeking to preserve their capital sourced from non-traditional investments and secure it with commercial real estate.
Steve Hason, newly elected chairman of the Association of Foreign Investors in Real Estate (AFIRE) agrees.
“Within the U.S, investors can participate in investments ranging from predictable core investments in gateway markets to potentially higher-yielding investments in secondary markets,” he says. According to AFIRE's latest survey, the U.S. provides an advantage for both safety and stability.”
To read the full report, click here.