Germany Investing in American Real Estate
There’s been a persistent trend throughout the past two quarters of overseas investing bodies making strong moves towards American real estate. As I noted in a prior post, the newest sources of interest have come from Chinese buyers in particular, with both private investors and wealth funds allocating extra capital to commercial property in economically healthy metros.
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However, it appears that certain European entities have recently set their eyes on American property as well. According to a recent Wall Street Journal report, German investors have become increasingly set on securing real estate holdings throughout the United States. However, contrary to the purchasing patterns of Chinese investors that emphasized commercial property, German buyers are much more focused on residential acquisitions.
As the Wall Street Journal story elaborates, the upsurge in German interest in American residential property has as much to do with the value growth outlook as it does with a secure alternative to Eurozone investments. Germany had the good fortune of remaining continental Europe’s economic stalwart throughout the recession, and was instrumental in bringing the Eurozone back from the recession. That being said, there’s widespread national apprehension that Germany’s local economy will lag along with the that of greater Europe. America’s economic independence, and the resilience of its hard assets like high-demand property, has made it a much more appealing alternative to shakier Eurozone-based investments.
So What’s the Takeaway?
As the Wall Street Journal outlines, German home investment still only represents a fraction of overseas purchases. Nevertheless, the diversified roster of countries seeking safe investment have in the United States bodes well on two levels. The first of which is that it injects a diversified source of capital into the American real estate market, a welcome boon that paves the way for price stabilization. The second major takeaway seems the emerging consensus from non-U.S. analysts that American real estate investments are exceptionally stable.
Despite concerns that market trends might portend a future bubble, America’s urban property in particular seems set for gradual value gains. As is the case with other major foreign buyers, Germany’s market focus seems centered on big cities, with the northeast and mid-Atlantic regions predictably popular. However, as the Wall Street Journal report notes, German buyers have taken an unexpected interest in property throughout the Fort Myers and Cape Coral regions in Florida. It seems particularly enterprising German buyers have begun purchasing and flipping houses throughout various regions along the East Coast, a pattern that America’s more lenient tax laws make particularly appealing.