Property data shows investors from out of the U.S. are answering the allure of an improving market by purchasing sizable amounts of national real estate.
International property buyers spent 25 percent more on commercial property from last April, Bloomberg reported, citing information from Real Capital Analytics, landing the amount of money spent by foreign investors at $7.97 billion. This is compared to a year-long $4.7 billion low in 2009.
"We've seen steadily increasing demand from non-U.S. investors," Max Swango, director of client portfolio management for Invesco Real Estate, told the news source. "The interest comes from all parts of Asia, Europe and the Middle East. You've got some relatively young, very large sovereign-wealth funds that are just starting to actively invest."
Commercial buildings garner attention
It's the high-quality properties in urban hubs that are getting the most attention from international investors, according to Bloomberg. The largest recent purchase by foreign buyers was not included in the figures, but it was the significant sale of a 40 percent stake in New York's General Motors Building by the families of Chinese real estate developer Zhang Xin and Brazilian billionaire banker Moise Safra as shown by public property records.
"It is the large trophy deals that really move the foreign volume," Dan Fasulo, managing director at Real Capital Analytics, told Bloomberg.
The news source notes that the U.S. in particular is a target for investment because of the sheer volume of commercial real estate it houses. One particular area of appeal is the amount of control that an investor has over property as opposed to shares. Property buyers have to ability to alter their purchase as they see fit, whereas a shareholder is likely to have no influence on their investment.
It's also an appealing area given the recent upswing in the economy, promising a rise in the value of investments in the near future.
Local economies influence sales
Of course, the level of activity coming from outside the U.S. varies, depending on how the local economy is doing. Jaime Fink, a senior managing director at broker HFF Inc. noted that Canada has recently topped Australia, the lead foreign investor in 2006 and 2007.
"The South Koreans are very active today, the Japanese less so," Fink told the news source.
Thirteen cities, including Dallas and Miami, make up 81 percent of commercial real estate purchases by foreign buyers, according to the National Association of Realtors.