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In spite of Achieving Record Figures, Overseas Investment in American Real Estate Remains Underreported by the Media.

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By Indranil Bhattacharjee
September 10, 2014

 

The amount of Foreign Direct Investment received by the American real estate sector touched phenomenal figures in the year 2013. However, the US media has failed to report the actual inflow of foreign capital in the country.

 

New York City,September 10, 2014

 

In 2013, foreign direct investment (FDI) in the commercial real estate of the country made headlines by achieving record numbers. Chinese companies made a great contribution to this grand success by investing a whopping $14 billion in America throughout the year. This figure is more than double the amount invested by them in the year 2012.

 

Unfortunately, only a part of this success story caught attentions of the media in the United States and the actual amount of overseas fund invested into the U. S. real estate remained largely underreported. Data companies primarily determine foreign investor transfers by looking at the deed transfers. As a result, they end up ignoring the foreign investments that are made by foreign investors in partnership with different domestic players.

 

It has been observed that foreign investors in the US are showing an increasing tendency to partner with American operators because this provides several advantages to the foreign investors. Firstly, a domestic partner’s expertise and experience makes it much easier for a foreign investor to operate efficiently in the highly competitive US market. In certain situations, partnership with a domestic operator also helps them mitigate hike in property tax, high property tax, or transfer tax.

 

American operators are also showing interest in partnering with foreign investors because it gives them access to a higher amount of capital. This, in turn, allows them to move fast in a market where deals are often closed by the payers that are able to move fast. Tishman Speyer, Blackstone, General Growth Properties, and Brookfield are some of the many U.S. real estate companies that are looking for potential foreign investors for many of their projects.

As the American real estate operators continue their efforts to remain competitive in the market, there is no doubt that their efforts will be backed to a great extent by the foreign funds. However, it is important to note that the reported figure of capital investments made by foreign investors only represents a small part of the actual investment.