In a search for more attractive yields, foreign investors will contribute a higher volume of equity towards U.S. multifamily deals during the second half of 2015 — when acquisitions volume could peak. According to CBRE’s Global Investor Intentions Survey, 53 percent of global real estate investors plan to increase investment volume this year, with 38 percent planning to invest outside of their region.

Takeaways:

  • 53 percent of global real estate investors plan to increase investment volume this year.
  • 38 percent of global real estate investors plan to invest outside of their region.
  • Compelling U.S. targets include New York, Dallas and Seattle; other possibilities include San Francisco, Los Angeles, Washington, D.C., and Chicago.
  • Foreign investors will prefer to team with national developers, REITs or buyers who will purchase more than $500 million of product this year.
  • Most international capital sources will target gateway markets for development investments; however, some will also consider primary markets and secondary markets for acquisitions.

In a search for more attractive yields, foreign investors will contribute a higher volume of equity towards U.S. multifamily deals during the second half of 2015 — when acquisitions volume could peak.

According to CBRE’s Global Investor Intentions Survey, 53 percent of global real estate investors plan to increase investment volume this year, with 38 percent planning to invest outside of their region.

U.S. cities in global capital sources’ top 10 include New York, Dallas and Seattle. Other compelling targets for foreign investors should include San Francisco, Los Angeles, Washington, D.C., and Chicago.

Larger multifamily owners and developers have suggested that the largest volume of foreign equity will emerge from China, as investors fear a Chinese real estate bubble and view the U.S. as a safe haven for commitments. Aside from China, equity for development and acquisitions should emerge from Japan, Canada, Europe and the Middle East countries of Saudi Arabia and Israel. In South Florida, South American-based investors should be active.

Foreign investors will prefer to team with national developers, real estate investment trusts (REITs) or buyers who will purchase more than $500M of product this year.

Most international capital sources will target gateway markets for development investments; however, some will also consider primary markets and secondary markets for acquisitions.

Ritz Banc Group, an asset manager, recently acquired a 296-unit property in Richmond, Virginia, on behalf of developer/owner Lincoln Property Group. The limited partner on the purchase is a Saudi-based family office.

Japanese-based Daiwa House represents one foreign capital source for developers like Lincoln. The equity source recently teamed with the developer and is said to be working with Holland Partners.

Active buyer Kennedy Wilson is likely to utilize equity from Japanese sources, as the firm has a presence in the Land of the Rising Sun. Kennedy recently announced it would sell 50 multifamily properties it owns in Japan. The assets are valued at nearly $475 million, with Kennedy Wilson receiving net proceeds of $100 million.

Other significant buyers, Waterton Associates and TruAmerica Multifamily, will utilize foreign capital moving forward. Waterton focuses on obtaining capital from Middle Eastern-based sources.

Email Erik Pisor.

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