The Land of Free and Home of the Deal: Foreign Investors in U.S. Assets
The Second Annual EisnerAmper Real Estate Private Equity Summit on October 1, 2014 featured a group of industry leaders discussing foreign investors in U.S. assets.
Discussion focused on how foreign investors are not just going after returns; they are looking at getting into the gateway cities. Operating in those markets mitigates their investment risk as a result of the high barriers of entry. These markets are hard to break into primarily because they have a finite amount of land, coupled with various government regulations.
Some of the gateway cities in the United States include New York, Boston, San Francisco and Los Angeles. These markets have the deepest liquid pool of core assets and the biggest challenge to entry is pricing competition.
Foreign investors are also looking to the U.S. for more attractive deals. We are seeing the beginning stages of an enormous wave of capital coming into the real estate market over the next 2 decades. Pension plans also need to find alternative investment options with fixed income, which brings in the core investment assets in gateway cities.