The foreign appetite for the purchase of real estate in the United States is strong and steady lately. It’s not just Aspen, Colorado mansions like the one bought and then recently sold by Russian oligarch and Vladimir Putin's friend, Roman Abramovich.
The buying of sizeable amounts of real estate here in the land of the free is coming from many sources around the globe and it’s amounting to lots and lots of money.
The beyond-the-borders funds are going into the major markets and now also into so-called Sunbelt areas. These were formerly considered secondary markets to New York, Chicago and Los Angeles, but global investors seem to have discovered Phoenix and Atlanta, among urban hubs in mostly Southern states, as hot prospective markets to place money.
Dmagazine reports that homes in the city of Dallas are highly attractive places for worldwide investment companies. The Association of Foreign Investors In Real Estate, in a 2022 survey, found that Texas metropolitan areas are the 4th most favored in the U.S. ahead of New York, Los Angeles and Seattle, according to the magazine.
But wait, there’s more: a Japanese conglomerate has already bought 183 homes in North Carolina. Yamasa Group is picking up single-family homes in Raleigh, with a total value of about $43 million. The big Asian firm is renting the dwellings to Tar Heel locals and has hired an Arizona-based property management company to operate the basics.
A different approach is that of Daiwa Securities Group DSEEY. The Japan-based asset firm owns U.S. single-family homes through its 2.2% ownership of the real estate investment trust, Invitation Homes INVH. This means that Daiwa is the proud owner of the equivalent of about 1,850 homes in the U.S. simply through its investment in the REIT.
Similarly, Norges Bank Investment Management of Norway owns 4.91% of Invitation Homes, which would be equivalent to ownership of about 4,100 U.S. homes.
Partners Group, a private global investment firm headquartered in Switzerland, recently announced the purchase of a $1 billion portfolio of single-family homes in the United States. The firm says the 3,000 homes, of which about 1,000 remain under construction, are in 17 of the Sunbelt states. Partners plans on renting these, according to their press release detailing the investment.
Constructiondive.com says 62% of cross border money is now headed into non-major markets, based on a Colliers International Group Inc. CIGI survey of multi-family investing. The attraction is said to be a combination of increasing populations and generally lower rates of taxation. Such “non-gateway” markets as Charlotte, Tampa, Nashville and Denver are being discovered by outside the U.S. investment capital.
One of the United States’ closest neighbors is casting a wary eye on the incoming flood of overseas money. Canadian Prime Minister Justin Trudeau wants to ban foreign buyers from owning houses in Canada. He cites how difficult it has become for some Canadians to find affordable housing—in part because of moneyed investors buying up such property, according to a recent article in Politico.
The current economic mix of inflation and the coming wave of interest rate hikes may have negative effects on the price of U.S. real estate and on how much more non-U.S. investing may be ahead.
Benzinga Real Estate News Bites
- The real estate investment platform Invown has launched an offering for a portfolio of four single-family rental properties in a suburb of Charlotte, NC, with a minimum investment of $500. The new-construction homes are located in the Mill Stone Comm… continue reading.
- Real estate crowdfunding sites let you invest in various types of real estate, some with minimums as low as $10. With this model, you gain ownership of real property without the headaches of taking care of tenants or coming up with funds for a large… continue reading.
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