Foreign Real Estate Investment: Will It Spread To Your Town?


Although I haven’t read any reports in the last couple of months, at the beginning of the year there was buzz about foreign investment in US real estate. Some reported on foreign investors taking advantage of the weak dollar to put down enough to create a good cash flow with the expectations, also, of appreciation after the market turns around. Domestic investors were still leveraging properties happy with breaking even. On the face of it this sounds like foreign investors have the better idea. I’ve always thought of leveraging too much as risky with less return, but I suppose if the interest rates are low enough, it can make sense in certain situations where appreciation is expected, but it doesn’t seem like a good short term strategy right now, and could even be a poor long term strategy, unless you consider long term 10 or more years.

It seems to me the present real estate environment in the US is ripe for foreign investment and this trend will continue for awhile, especially since we are one of the more stable countries regarding private property, and the odds are we’ll soon be out of our economic doldrums for another round of good old American progress.

Some see foreign investment as worrisome, considered from the angle of indepedence and nationalism; this is a traditional view of sovereignty, suscpicious of foreign influence. The internationalist mindset, while still concerned with sovereignty, has a more co-operative goal where countries interact more with one another and there is less fretting over foreign investment — it’s seen as a healthy aspect of worldwide markets, although respectful of national differences and independence, good for international economic investment, plus the sharing of cultures and ideas and technology.

What most people really fear is extreme globalism where all barriers and boundaries are erased in a one world order — this is not likely to happen due to the strength of the desire nations have for sovereignty and the myriad problems that arise regarding who would govern the “one world” – plus cultural and religious differences, diverse political ideologies, and so forth. The only way it could happen would be through coercion and then it could never be held together without worldwide acceptance and committment to the order.

So, getting back to reality, we are in an internationalist society where economic interaction is growing worldwide. Is this a problem or a boon for the US? For large investors in metropolitan areas it looks like it might be a boon. Whether it’s bad for the country, individuals will vary in their opinions, but I believe it’s healthy to foster worldwide economic growth and interdependence — the more we trade properties, invest, share technological ideas, buy from and sell to one another, improve cultural understanding and all prosper together, the less we will be trying to kill or enslave one another.

Technology has made the world small, so that we are less likely to be at odds through cultural ignorance, although we have a long way to go. How will all this international real estate investment affect the average investor? If foreign investment continues in the US, it might spread from New York and Washington, D. C. to other parts of the country once foreign investors discover more opportunites, so that the average investor might be dealing with foreign buyers and sellers on a regular basis. Will strategies change? Will the average investor have to broaden their cultural knowledge and start gathering information on trends and what foreign investors find attractive? What are the marketing opportunities for investors with properties to sell? If it grows rapidly will there be a resistance in smaller cities to foreign investment? I certainly have more questions than answers, but it might be time to ask these questions and start preparing for the possibility. Those investors who are prepared and proactive will be in the best positions.

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  1. Funny you say that we are one of the most stable countries as far as owning property. I just fininshed reading an article on Eminent domain and it is scary.

    I was reading it because the city of Baltimore is taking me to court for a receiver action and wants to appoint a receiver to auction off my property. It just goes to show how much worse it must be in other countries.

  2. Yes, Ned, even though it’s better here than other countries, a troubling trend has been going on for years surrounding eminent domain. To me, private property rights is the most important issue facing us as we grow.

    Thanks, Mehmet

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