The latest survey shows that Japanese investment firms still lead the race in terms of the volume and value; as well as diversity in terms of asset class, Ironically, US firms also lead in terms of foreign investments into Japanese real estate assets, sometimes I wonder why this is the case?
Anyway, Japanese firms are still led largely by Japanese property groups; the J-REITS (Japanese REITS) are still more concentrated in the Japanese property markets. Another emerging trend is the property investment groups or funds established by Japanese banks including its regional banks.
Some have suggested Japanese investments firms still believe US presents as the safest investment ground for properties; providing relatively higher rental yield as well as re-development potentials. Japanese firms are quite active, they have invested in commercial projects; and have invested in very large number of hospitality assets (resorts, hotels); as well as involves in special purpose infrastructure and real estate projects such as sports stadiums (eg. Baseball stadiums) and entertainment complexes.
Koreans are coming
What’s interesting about this fast emerging and ambitious economy is its ambition in investing in international assets. Korean firms are active in global properties, to date, most of investments are related to commercial and retail properties; including investing in some iconic commercial, Premium Grade buildings around the world. Korean investments are led by institutions, often very large institutions including the nation’s national pension fund. Other investors including the conglomerates LG and Samsung affiliated investment groups have also invested in commercial buildings, industrial buildings and large lands for developments and plants.
Canadians, just across the border
Funny enough, when asked about who the most active real estate investors are? Canadians are often forgotten by American groups. They are the perfect choice if you are looking for international investors for your US projects. This is based on several reasons; first, the language advantage, second, similar market practice and third, ease of funding and due diligence process. The last factor is also very obvious, Canadian dollar is currently trading above USD or just under parity, and there has been record volumes of investments coming from Canadian investors, both from individual investors as well as institutional investors. It’s interesting to see how few advertisements there are from American companies to pitch Canadian investors, this is a strategy to consider if I am an American developer.
Aussie, Aussie, Aussie
The Australian spirit is true and alive when comes to real estate investments. Australians love properties but there are always so limited opportunities. If you think of this way, Australian firms are now as active in areas like Poland, Sweden, and needless to mention, lots of activities in UK, Middle East and Asia. There are also more than a dozen REITs listed on ASX investing in Asian properties.
So naturally, Australian firms will consider US properties. The success of Westfield has demonstrated how ambitious Australian real estate groups have become when comes to investing in international markets.
Another interesting observation I have made recently was to see Macquarie Bank, one of Australia’s leading investment banks is one of the most active lenders in Canada and USA, in fact, much more active than back in Australia. Macquarie also has multiple REITs listed and also close ended funds available in United States and Europe.
There are different opportunities available from Australian institutions;
One disadvantage for Australian investors though, is its interest rate is substantially higher than United States or Canada, which makes debt-funding more expensive for international investors. There is also a growing trend for Australian individual investors to invest directly into residential properties in United States, and it’s a very popular discussion topic on streets when I was in Australia earlier this year.
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