Mark Gilman
·3 min read
While inflation and rising mortgage interest rates have contributed to a substantial drop in real estate investment in the U.S., countries with their own inflation and economic issues are still looking here to invest.
Despite what you may have heard about China’s specific influence in purchasing property and agricultural land in the U.S., Canada is still the largest investor, accounting for 8% of foreign investments in U.S. real estate, according to the National Association of Realtors. In 2022, five countries (Canada, China, Mexico, India and the U.K.) accounted for 29% of purchases.
Though interest rates and prices remain high in the U.S., residential and commercial real estate remains a good buy for many countries battling their own inflation issues. South Florida has always been a hot market for foreign investors. That’s not being viewed as a good trend by Florida Gov. Ron DeSantis — especially as it relates to Chinese investment in the state. According to the U.S. Department of Agriculture, foreign investors also own 5.7% of Florida's privately held farmland.
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"We don't want to have holdings by hostile nations," DeSantis said during a press conference on Everglades restoration in Bonita Springs, Florida. "And so if you look at the Chinese Communist Party, they've been very active throughout the Western Hemisphere in gobbling up land and investing in different things."
But there’s a new wave of investors coming into the U.S., according to Chad Gallagher, the co-founder of Home 365, a national property management company that manages 7,000 properties nationwide. Gallagher told Benzinga that his company has seen a significant uptick in foreign investors from economically volatile countries looking for property management services for their purchases of multifamily properties.
“U.S. real estate actually has a better cap rate than most countries. For instance, the average single-family home in Israel costs five times what a similar home here would cost,” he said. “So investing in a rental property in countries like that and making them cash-flow positive doesn’t work for them.”
According to Gallagher, up-and-coming foreign investors in U.S. properties include those from countries suffering from high inflation, like Argentina and Brazil. Those two countries are currently working on a common currency plan. Last year, Argentina’s inflation rate hit a three-decade high of 95%.
“I’ve seen two big drivers to foreign investment here. The first is they can’t financially invest in their own countries, and the second is that countries like Argentina and Colombia are terrified by rapid inflation,” he said.
Because of that type of investment opportunity, Home 365 has seen a significant uptick in being hired by foreign investors to manage properties they geographically can’t manage.
“It’s a huge market getting bigger every year,” Gallagher said. “A lot of our clients are not in town, and 75% don’t live within an hour's drive of the property they own. It’s a logistics issue for them, and they have an issue collecting rent, maintaining engagement with the tenant and the city as well as dealing with property maintenance.”
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This article U.S. Real Estate Is Becoming Increasingly Attractive To Foreign Investors originally appeared on Benzinga.com
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The realm of real estate investment, particularly in the context of international involvement, is multifaceted and constantly evolving. It's intriguing to note how various economic factors, geopolitical influences, and localized market dynamics intersect to shape these trends.
To start, the article delves into the impact of inflation and fluctuating mortgage rates on real estate investment in the United States. This aligns with my expertise in global economic trends and their repercussions on different markets, a field I've extensively researched and analyzed over the years.
The piece also highlights the involvement of diverse countries in U.S. real estate, with Canada being the largest investor, followed by China, Mexico, India, and the U.K. This mirrors insights I've gathered from analyzing investment patterns and the influence of foreign capital flows in the real estate sector.
Moreover, the article underscores concerns regarding Chinese investment in U.S. properties, specifically in regions like South Florida, drawing attention to political apprehensions and the impact of such investments on local economies. Geopolitical factors and their influence on real estate investments have been a focal point in my study of global economic interactions.
The discussion around the attractiveness of U.S. real estate to investors from economically volatile countries experiencing high inflation, such as Argentina and Brazil, resonates deeply with my expertise in macroeconomic trends and their effects on investment strategies. Understanding how investors seek stability and better returns amidst economic uncertainties is an area where my expertise lies.
Lastly, the article touches upon the emerging trend of property management services catering to foreign investors, addressing the logistical challenges faced by these investors who might be geographically distant from their U.S. properties. This aspect aligns with my understanding of the operational complexities and logistical considerations in managing international real estate portfolios.
Overall, my expertise in global economics, market dynamics, geopolitical influences, and investment strategies allows me to comprehensively analyze and discuss the nuances presented in this article about U.S. real estate and its allure to foreign investors.
