‘Foreign big hands’ flocking to US commercial real estate… Highest foreign investment in Korea and other countries in three years

Foreign capital buying commercial real estate in the U.S. last year, when the U.S. real estate market was hot, recorded the highest since 2018.

According to the Wall Street Journal (WSJ) on the 8th (local time), citing data from Real Capital Analytics, a commercial real estate market analysis company, the total amount of US commercial real estate purchased by foreign capital last year reached $70.8 billion (84.8 trillion won). reported

This is twice the amount of commercial real estate purchased by foreign capital in 2020, when the COVID-19 outbreak occurred, and the highest figure since 2018 (US$94.6 billion).

The WSJ named Canada, Singapore, South Korea and the UK as representative countries that bought the US commercial market last year.

Korea ranked 10th (3.7%) among foreign investors who invested in the US commercial real estate market in 2019 alone, but jumped to third place in 2020 when the US introduced ultra-low interest rates after the COVID-19 crisis.

It is analyzed that Korean investors increased their investment in US commercial real estate by taking advantage of the sharp drop in the price of exchange rate hedging products thanks to ultra-low interest rates.

The WSJ analyzed that foreign capital’s doubling of US real estate investment in 2021 compared to the previous year was largely due to the eased entry restrictions for the prevention of COVID-19 and the recovery of the US economy.

Commercial real estate purchased by foreign capital last year is known to include warehouses, rental apartments, and offices for specific companies such as pharmaceutical companies, which are recently popular in the US market.

In particular, it is analyzed that foreign capital has increased interest in real estate in the southeastern sunbelt region rather than in the eastern and western coastal region, which has traditionally been popular.

Dallas and Austin in Texas and Nashville in Tennessee have recently been popular with businesses because of their high growth rates and low taxes.

Last year, 64% of commercial real estate purchases by foreign capital were located outside of major metropolitan areas. This is an 11 percentage point increase compared to 2019 (53%).

The WSJ predicts that foreign investors will increase their investment in the US commercial real estate market in 2022 as well.

MI Asian Staff
Author: MI Asian Staff