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The US market is attracting foreign capital

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The US commercial real estate market is picking up - significant investment is making economic recovery a smooth process according to President of Capital Markets & Investment Services for Colliers International Brian Ward.  

The property expert said the following four factors are going to affect investors' property development plans

1. Smart foreign capital 

There is a healthy flow of capital from overseas. However, investors are becoming more savvy and considering long-term opportunities. 

"As we enter a mature part of the real estate cycle, foreign investors are becoming more conservative with their commercial real estate investments in the U.S," says Mr Ward.  

Also, the volume and quality of data that has now become available is enabling investors to make smarter choices.  

2. Venturing outside the core markets 

According to Colliers International foreign capital is pouring into cities such as Seattle, Boston, Washington D.C., Chicago, Dallas, Denver and Atlanta. Investors traditionally preferred centres such as New York and San Francisco. Again, trends indicate that they prefer to take a long-term smart view towards investment. 

3. Developing a technology focus

Perceptive foreign investors are aware of the fact that technology is a growing sector and is only going to improve in the future. 

They are keen on exploring the feasibility of markets where technology and biotechnology jobs are expected to arise. 

"Cities like Boston, Seattle and San Jose remain magnets for foreign investment. Other cities offering similar characteristics include San Diego, Salt Lake City, Washington, D.C., and Raleigh-Durham," commented Mr Ward. 

New York is expected to top the charts in terms of foreign investment in the foreseeable future. 

4. Energy market and interest rate unpredictability 

The prices of oil and gas have been fluctuating. Market gurus are arguing both sides of the coin. While some experts say this unpredictability will bring adverse long term effects, others argue that the consequences will last only a short time making it an excellent opportunity to exist in commercial real estate.

As for the interest rates, even if the federal rate does change, according to Mr Ward, there is enough of a gap between cap rates and interest rates so commercial real estate values are not going to be affected in the foreseeable future.

Date Published: 05 May 2015
Category: General News

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