Israelis increase real estate investment in the U.S.

Jan 16 (Reuters) - Israeli investors are increasingly looking to invest in U.S. properties as they seek to diversify their portfolios and as local real estate has grown pricey.

A report by real estate services firm Colliers International with data through mid-2013 ranked Israel as the third-largest foreign investor in U.S. commercial real estate over the past three years with a 6 percent share, tied with Switzerland and behind Canada and Germany.

In the U.S. multifamily market, Israel was also third with an 11 percent share of sales volume while it was second in Florida's multifamily market among foreign investors.

Israeli investment in U.S. commercial real estate surpassed $1 billion in 2012.

"From the demand I've seen and from speaking to Israeli investors I think that number will go up dramatically," Robert Ivanhoe, global real estate practice chair at the Greenberg Traurig law firm, told Reuters during a visit to Israel. "There appears to be a need for greater diversification and for finding additional opportunities because Israel is a small country and domestic investment opportunities are limited."

Foreign investment in U.S. commercial real estate totaled nearly $27 billion in 2012, according to Colliers.

New York-based Ivanhoe, who represented Israeli billionaire Yitzhak Tshuva in his purchase of Manhattan's Plaza Hotel in 2004 for $675 million, said he is currently representing Tshuva's firm Elad in a development joint venture with Silverstein Properties in New York.

The two partners have acquired a development site on Manhattan's West End Avenue that will include retail space as well as condominiums, a project cost estimated at $800 million.

Some Israeli investors are focused on New York while others feel the city is too expensive and the deal size too large. Ivanhoe said New York was close to becoming overpriced though he does not see a bubble forming.

Harel Insurance Investments and Financial Services , one of Israel's largest insurers, was part of a group that in April acquired the 51-story IDS Center, the tallest tower in Minneapolis, for $277 million.

Ivanhoe said three quarters of his focus now is on New York but from 2000-2008 he spent half his time on transactions in Las Vegas, a market hit hard by the global financial crisis.

"I think it will come back but someone has to be prepared to invest and be patient. Its recovery will follow that of the U.S. economy," Ivanhoe said. 

Chinese Investors Seeing Bargains Rescue Distressed Commercial Real Estate In The U.S.

Summary: Chinese investors are investing in distressed commercial properties in cities like Detroit.  Dongdu International paid $13.6 million for two Detroit office buildings, with plans to convert one into apartments.  (The replacement price of these two buildings is $80 to $100 million each.)  New York's Cassa Hotel was bailed out of bankruptcy by a Chinese firm.  Chinese property deals in the U.S. grew to $1.7 billion this year from $1.1 billion in 2011.  These buildings, by Shanghai comparisons, are incredibly cheap.


New York --(International Business Times)--

Chinese investors have found a new place to park their cash: increasingly they snapping up distressed commercial properties in American cities like Detroit, where despite the risk steeply discounted prices are appealing to investors used to China's highly inflated real estate prices.

Wealthy Chinese have been buying residential properties for years in popular destinations like California and New York but now they are also bailing out office buildings, hotels and other commercial properties overleveraged from the boom years in the U.S., the Wall Street Journal reported this week.

Earlier this month Chinese firm Dongdu International (DDI) paid $13.6 million for two well-known Detroit buildings with plans to convert one into an apartment complex, while the other building will be remain an office. Other Chinese purchases include New York’s Cassa Hotel whose previous owners sought bankruptcy protection, and a vacant office park in Silicon Valley.

The new Chinese administration has encouraged companies to diversify their holdings and spend foreign capital reserves, which prompted an overall rise in Chinese U.S. property investment this year. Chinese property deals in the U.S stand at $1.7 billion so far in 2013, up from the $1.1 billion 2011, according to research firm Real Capital Analytics Inc..

While some Chinese companies like Dalian Wanda Group, owned by China’s richest man Wang Jianlin’s , have bought high-profile landmark buildings others are more attracted distressed properties needing further investment and management. Other foreign investors generally shun projects requiring such secondary investment.

These properties are often in default and suffering high vacancy rates or facing other turnaround challenges. Experts say these deals suggest the Chinese are both more willing to take risks than other real estate investors and patient enough to hold properties until values rebound.

Four of the 15 largest Chinese property investments in the U.S in the past year have “resolved a troubled situation,” Real Capital said. In just the past few months, the Chinese have made 23 direct bids for properties on sale through Auction.com LLC, many of which would be distressed, said the company’s Executive Vice President Rick Sharga said.

Steeply discounted prices account for much of the recently-purchased properties' appeal according to the Wall Street Journal. Each of the two Detroit buildings, for example, would have cost between $80 million and $100 million to replace, said Ryan Snoek, a consultant for Luke Investments, the seller of the Detroit properties.

"People from China look at the price at which you can buy these buildings and think that's the cost of one apartment in Shanghai," said Goodwin Gaw, founder of the Hong Kong-based Gaw Capital Partners.

http://www.ibtimes.com/chinese-investors-seeing-bargains-rescue-distressed-commercial-real-estate-us-1445528

Foreign buyers boost commercial real estate investment

Summary:  Canadian, European, and Middle Eastern investors, ushered by the hospitable lending environment, are looking to make real estate investments in the U.S.  The new wave of foreign investors have focused on the East and West Coasts. but are projected to move inland toward Dallas and Houston, which have the attractive job growth and population growth foreign real estate investors find attractive.  The asset class is itself an attractive alternative to volatile securities markets.  Foreign investment is expected to reach $350 billion this year, up 30% from last year, though still below the 2007 record of $570 billion.  It is a sellers market as commercial real estate supply is low.

Dallas --(U.S. Dallas News)--
The commercial real estate market is quickly making up ground lost in the recession.

And so far higher interest rates haven’t rained on the parade of investors looking to take advantage of the market.

A surge in foreign investment in this county’s property markets is also underway.

“The amount of capital that is coming from foreign investors in the U.S. is going to accelerate pretty dramatically,” Mark Gibson, executive managing director of HFF LP, told real estate executives meeting in Dallas on Friday.

Gibson said most of the offshore investors looking to boost their U.S. real estate holdings are coming from Canada, Europe and the Middle East.

Increasingly these buyers are spreading out from the large East and West Coast markets to buy in other cities, including Houston and Dallas.

Commercial property investors are focused on locations with the best long-term growth prospects, Gibson told members of the Commercial Real Estate Women Network at the Omni Dallas Hotel.

“They are looking at markets with job and population growth,” he said. “And they are looking for the infrastructure that is going to support jobs and population growth.”

Dallas-Fort Worth and Houston are near the top of the list of the country’s fastest employment growth markets. All of Texas’ major markets are seeing huge population increases — due in part to migration of people and business from other states.

“There are more corporate headquarters moves happening in the U.S. now than we’ve seen ever,” Gibson said. “A stunning amount of corporate America is relocating out of California to other places.”

Gibson said HFF — one of the country’s largest commercial real estate investment banking and property marketing firms — is forecasting about $350 billion in commercial real estate investment in the U.S. this year.

That’s up about 30 percent from last year, but it’s still well below the record $570 billion in 2007.

Gibson said many of the commercial property problems created by the recession have been solved. “Distressed asset problems — that’s yesterday,” he said.

Most of the big bank lenders “have worked through all their [problem properties] for the most part,” Gibson said. “They are on offense instead of defense — they are deploying capital into real estate.”

Even with this year’s higher interest rates, investors are pumping billions into commercial property, Gibson said.

“They are very tired of volatility in the public securities market,” he said. “They think it’s been hijacked by traders.”

Gibson doesn’t see any of the commercial property pricing and construction excesses that were apparent before the recession.

“There is discipline in the market, which there wasn’t in 2007,” he said. “Commercial real estate supply is still modest.”

In fact, he said, “It’s the lowest percentage supply of commercial real estate as a percentage of GDP in U.S. history.”

http://www.dallasnews.com/business/commercial-real-estate/headlines/20131011-foreign-buyers-boost-commercial-real-estate-investment.ece