Foreign commercial real estate investors continue to purchase overpriced properties. There is intense competition among foreigners to purchase commercial real estate. Local real estate investors usually do not overpay for real property, while foreign investors will over pay by 13.8% according to Costar. According to Costar, “Canada is the largest global buyer of U.S. real estate.” As property values increase, one way to differentiate themselves from other investors is to provide value-add opportunities to increase yield. The U.S. commercial real estate market continues to be a highly attractive and competitive environment to invest in.
Excerpts from Article: “…the current low interest rate environment, economic expansion across an increasing number of markets, and improving real estate fundamentals as the main reasons investors are continuing to favor commercial real estate.”
“…Several reasons why out of market investors may overpay for CRE:
-They might have an information disadvantage relative to local participants.
· They may be disproportionately represented by tax-exempt and institutional investors who have superior access to reduced cost of capital, giving them more of an ability to outbid other investors.
· They may be represented by less sophisticated investor clienteles. Or,
· The investors may be coming from cities with more expensive rental markets, which could be skewing decisions.”
“Their thesis quantifies what many CRE professionals have suspected for years: that foreign buyers are liable to pay more than their domestic peers for U.S. real estate assets”
Citation and Link: Heschmeyer, Mark 6 May. 2015. “Overseas Investors Accelerating CRE Property Price Gains,” Costar Group. 6 May. 2015 http://www.costar.com/News/Article/Overseas-Investors-Accelerating-CRE-Property-Price-Gains/171326
Picture & Citation: O’Connell, Jonathan. 1 Jul. 2013. “Foreign investors snap up Washington real estate at an accelerating clip” NowUKnow.com. 6 May 2015. http://www.nowuknowonline.com/forum/topics/foreign-investors-snap-up-washington-real-estate-at-an