People from around the globe has been investing in places other than their home countries. The U.S. is still one of the attractive markets for foreign investments such as real estate in the coming months.
There has been a tightening of monetary policy by the Federal Reserve recently starting with the rate hike cycle. And according to Yahoo, Mitch Roschelle, partner at PricewaterhouseCoopers, said that the uncertainty in global currencies, stocks, and bonds could benefit hard assets like U.S. real estate..
“Whenever there's instability in a society or in the world, investors tend to rotate towards the non-trading asset,” he said. “They rotate to real estate as opposed to the trading asset.”
In the last five years, top foreign investors in the USA came from Canada, Singapore, Norway, China and Germany, according to PricewaterhosueCoopers. Canada is the top investor of the US with almost 31% foreign investments coming from the said neighboring country.
It has been reported that Chinese investors are very much interested in putting their hard-earned money into foreign investments. And the US is one of the countries that they are interested in. According to the New York Times, these people are eager to invest anywhere except their home country. In fact, a lot of them have been purchasing real estates in London, Vancouver and Australia. About 5% of total foreign investments in the country is from China.
“The yield that those investors are looking for is really a long-term yield,” said Roschelle. “It's a belief in our economy and a belief in the ability of real estate assets to generate cash flow greater than inflation. So interest rates aren't really that important in the short term.”
On another hand, in Australia, the surge of foreign investments in real estate is resulting to increasing vacancy rates as the properties remained unoccupied. With the surge of real estate investments, it is highly probable that vacancy rates could also go up.
What do you think about the rising foreign investments in the country? Is it okay to sell real estate investments to foreigners even though such properties end up with no residents?
