The commercial real estate market in the United States is booming and foreign investors have become one of the most powerful players in this market. This is because many foreign economies are unstable right now, with local investments fraught with uncertainty. Foreign billionaires are instead choosing to park some of their extra cash in international investments. One primary example of a stable foreign investment is the United States commercial real estate market.
While the number of foreign investors purchasing property in the United States has dropped from its recent all-time high, it is still occurring at a much greater rate than the historical average. At present, foreign investment capital makes up about 17% of the commercial real estate market in the United States.
It is interesting to note, however, the types of properties that these foreign investors are buying. While there are a few foreign investors that purchase multimillion-dollar complexes, this is actually not as common as the media would have you believe. The big properties are always the ones that make headlines, but it is the steady influx of smaller properties being bought up with foreign currency that has been boosting the United States economy over the last few years.
The majority of foreign investors choose to purchase several smaller assets rather than one large property. This is important for two reasons: acquiring several smaller assets tends to be a more stable investment strategy – if one fails, you are still left with a few other profitable commercial properties. This factor is very important to foreign investors whose primary goal is to preserve their capital. The other factor influencing this investment strategy is a practical one – it is typically much easier to find a few smaller, suitable properties than one larger property. Most foreign investors want to get their money into the commercial real estate market as soon as possible rather than waiting around for a larger scale suitable property to be available.
Two of the most popular types of smaller commercial properties for foreign investors to buy are hotels and apartments buildings. Nearly three in four of the commercial properties that were sold to foreign investors last year were hotels or apartments buildings.
Another key factor in the investment strategies of foreign investors is where they are choosing to invest their money. Nearly half of all foreign commercial investments are located in one of five key cities: Los Angeles, Atlanta, Chicago, Dallas, and New York City. Other popular markets are San Francisco and Phoenix. The one thing that all of these markets have in common is that they are steadily increasing in population, making them a promising place to own property.
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