A foreign investment can come with some faults and problems of its own. Such problems include exchange rate volatility, valuation, and market risk such as a real estate market collapse. If the Federal Reserve raises interest rates either later this year (which is looking less likely as we move into the fourth quarter), then the dollar will strengthen, which will make it more costly for foreign investors to invest in U.S. real estate. However, if the Fed raises rates, this could signal to foreign investors that the U.S. economy is growing and doesn’t need the support of zero lower bound interest rates. Foreign investors are subject to exchange rate risk as well, which is most likely why foreign investors are more interested in all-cash deals versus leveraged deals. Additionally, there are some restrictions with FIRPTA: if an investor buys a foreign advisor REIT, then he or she cannot own more than 49 percent.

 

The Commercial Real Estate market is expected to grow by 7.6% next year and in 2017 according to Moody’s/RCAs Index. This is a higher growth rate than the previous years that have averaged around 5.1%. The rapid growth is due, in part, to new technological advances in the field of CRE acquisition as well as the increase in funding for Commercial  Mortgage Backed Securities, which is expected to rise from $115 billion to $133 billion. U.S. real estate is expected to remain attractive with a strong U.S. dollar and with the instability of emerging markets the stability of the U.S. real estate will remain extremely attractive. The Commercial Real Estate market is expected to grow by 7.6% next year and in 2017 according to Moody’s/RCAs Index. This is a higher growth rate than the previous years that have averaged around 5.1%. The rapid growth is due, in part, to new technological advances in the field of CRE acquisition as well as the increase in funding for Commercial Mortgage Backed Securities, which is expected to rise from $115 billion to $133 billion. U.S. real estate is expected to remain attractive with a strong U.S. dollar and with the instability of emerging markets the stability of the U.S. real estate will remain extremely attractive.