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Inbound and Outbound Asian Investment into the U.S.

Panelists at the recent Global Leaders in Real Estate Summit—held in San Francisco by EisnerAmper and iGlobal Forum—shared the marketplace trends they’re seeing in foreign investment. The bottom line: Demographics drive the market, and interest begins where demand exceeds supply.

Panelists Richard Price of CBRE Global Investors, Tim Albinson of Emergent Capital Partners, and moderator Jenny Liu of Pillsbury discussed changing consumer wants, small box retailers, senior and student housing, and future data centers as areas for investor focus. Asian countries, especially China, present many opportunities for private equity real estate investors that are catering to strong consumer demand.

For example, China’s shopping centers have become very successful in attracting consumers to malls. Similar potential investments can be found in other countries, such as Japan, Australia and India. Indonesia is currently where China was 10 to 15 years ago, so it will take another 10 to 20 years for Indonesia to catch up to China’s investment levels. While many have already staked a claim, there are still plenty of investment opportunities in China.

In the broader Asian market, doing extensive research to find an off-market deal should be part of every investment strategy. Also worth keeping mind, the simpler the fund’s structure, the more efficient the fund.

As always, investment strategies contain risks, and a major one is currency risk. Hedging through local currency is expensive in many parts of the world. However, continued local investment is also necessary to build success. For these and other reasons, limited partners must assume the risk from a global perspective and operate with an iron constitution. There are many changes each year, and there’s no crystal ball to tell us which risks are (and aren’t) worth taking. But for those who can effectively manage the risk, opportunity abounds.

 

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