Asian Investors Again Eyeing U.S. Real Estate as Commercial Market Bounces Back

When the economy began tanking in the first quarter of 2007, both the commercial and home real estate markets in the United States took significant hits. To this day, sales of single-family homes sit at 30 million fewer per year than before the recession. Commercial real estate shrank from 140 million units sold annually at the beginning of the Great Recession to only 100 million at the height of the crisis in 2010. Today, the market for commercial real estate beats out the highs of the pre-recession era, with more than 150 million units sold in Q1 of 2014. It’s a definite sign that commercial real estate, at least, remains a healthy market, and Asian investors are taking notice.

Investments Already at 88% of 2013 Levels, Could Set Records
According to a new report from CNBC, Asian investors are “aggressively” investing in the U.S. commercial real estate market once again. While investment has yet to recover to 2007 levels, investments from foreign investors in China and many of the Southeast Asian nations have ballooned, reaching 88% of 2013 investment levels in record time. American commercial spaces are increasingly seen as a low-risk investment for Asian investors whose local economies offer only stagnant, or even toxic, commercial investment opportunities.

“With Asian state-run funds searching the world for stability and diversification, Asian pension funds securing assets as they prepare for aging populations, and new regulations allowing for higher allocations to commercial real estate by Chinese insurers having been implemented, U.S. commercial real estate has become an extremely popular asset class for Asian capital. Additionally, as the recent upheaval in global equities has served to drive interest rates lower once again, the already world-leading risk adjusted yield of U.S. commercial real estate has only gotten better in recent weeks,” said Taylor W. Grace, managing partner at Midwest Capital Funding.

The Wall Street Journal reports that Asian investment is particularly strong where multi-family dwellings are concerned. Luxury apartment buildings in New York and LA have flown off the market as Chinese and Southeast Asian ventures have snapped them up. Apartment buildings are now being targeted, with more than $522 million worth of the complexes being bought from January to September. For sake of comparison, 2013 saw investment totals of $537 million, a figure analysts speculate will be blown out of the water by the end of Q4.

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