A prominent expert believes that the foreign investment boom in US Commercial real estate is thriving and it is likely to continue. During the Delivering Alpha conference presented by CNBC and Institutional Investor, the global head of real estate at Blackstone, Jonathan Gray, states that China is the leading foreign investor in the real estate boom, but there is also money coming from Canada, Norway, the Middle East among others. He also stated that the big influx in foreign capital does not necessarily mean that the market is about to hit top. He says, "It's always easy to say foreigners are showing up, therefore it's the top of the market. It's the Japanese with Rockefeller Center, that kind of thing. I don't think that's always the case."
Gray has also stated that there is a difference between the current market and the crash that happened in the last decade that caused the financial crisis. He added that conditions now on several levels are different.
Furthermore Gray had said, "We have a lot less leverage in the system. Back then people were 90-plus percent levered...We had a lot of building going on and we were late in an economic cycle. We don't have those conditions today. That would argue that real estate is going to do fairly well in the next couple of years."
He indicated that the high levels of debt and overbuilding, which is happening already in some areas, may be warning signs that the market may be going into another unstable bubble.
But he has also expressed optimism on the current situation stating that, "There's not a ton of building going on, leverage in the system is reasonable and we still think this economic cycle has a bit of a ways to go."
The Blackstone Group L.P. is an American multinational private equity, investment banking, alternative asset management and financial services corporation based in New York City.-Wikipedia
