CPN - March 2009 - (Page 24) INDUSTRY PULSE INVESTMENT mercial real estate. Active in the middle of last year, Nordic sovereign wealth funds have lain quiet since the steep decline in oil prices, said Steve Collins, managing director for Jones Lang LaSalle Inc.’s international capital group. And Japanese investors were actively looking for a fire sale last year but exited when they could not find suitable bargains, he reported. “They are now trickling back,” and the strong yen may boost them. Daniel Marre, partner in the law firm Perkins Coie L.L.P., speculated about Dubai’s ability to invest. “Dubai is tremendously overbuilt,” he said.“A lot of these projects are not going to get built.” Additionally, many other Middle Eastern investors are focused on their own back yards, he said. Countries like Syria and Lebanon are attracting increased investment from other Middle Eastern countries, which are familiar with the region and can achieve higher returns than if investing in the United States. Among those that have been investing in the United States, the United Arab Emirates bought the most, $5.7 billion worth, during 2008, and German investors came in second with $3.2 billion, according to Real Capital Analytics Inc. Predicting which countries will be most active going forward poses a challenge because investment volume has been so muted of late, Fetgatter said, but Germany is likely to top the list again in 2009, based on historical trends. And while Japan’s economy is deteriorating, the yen has been strong versus the dollar, potentially spurring investment from there, Moore noted. Canadian investors could well be active buyers, owing to their proximity and familiarity with the United States, Liantonio said. He also anticipates Russian investors increasing their U.S. presence:“I can see a flight of capital. Russian investors want to get their money out of that country.” SECTOR AWARENESS Overseas players, like investors and lenders based in the United States, are paying more attention to U.S. multifamily properties than to other sectors. Multi-family dethroned office after its two-year run atop the Association of Foreign Investors in Real Estate survey. Office still came in favorably, in second place, however, followed by industrial, retail and then hotel. “Investors have the idea that (home) mortgages are hard to get today so that is likely to mean that the rental market will strengthen,” Fetgatter said. The most attractive among office assets are likely to be core, high-quality product in major U.S. markets, said Cassidy & Pinkard Colliers managing director Drew Flood. And industrial properties could prove an early beneficiary of the economic recovery. “Durable goods orders will pick up, and these goods have to be warehoused,” Marre noted. Also like U.S. investors, though, foreign investors are not likely to ramp up activity in the United States quickly, stated CB Richard Ellis Global Property Advisors senior director Robert Stamm. He speculated that they will wait to see how the Obama administration proceeds. In any case, foreign investors need indications that the U.S. economy is stabilizing. “There is the sense that the U.S. has been the first to go into the downturn and will be the first to come out of it,” Moore said. He added that foreign investors are always focused on one question when talking to him.“They always ask if our housing market has hit bottom yet.” According to Liantonio, “The roadblock is that they have to get comfortable with the recessionary economy. There is such a drumbeat of bad news.They have to believe we’ve turned a corner, wait a little bit and find that repricing has created some investment opportunities.” —Reach senior editor Eugene Gilligan at eugene.gilligan@nielsen.com. For coverage of other business lines, visit www.cpnonline.com/specialties. Digital Resources for Commercial Real Estate Executives Tune in, view or blog when it’s convenient. Our digital resources are available to you 365/24/7. Exclusive interviews with high-profile industry experts, personalities and CPN Executive of the Year award winners John Cushman, chairman of Cushman & Wakefield Inc.; Mark Rauenhorst, chairman & CEO of Opus Group and Gordon DuGan; president & CEO of W. P. Carey & Co. as they discuss their outlooks and strategies for this difficult market. Launching CPN’s CEO Series, John Cushman, CPN’s Lifetime Achievement award winner, offers his insights into the commercial real estate industry’s past, current shifts and how it will have to change for the future. Daily broadcasts and weekly updates on the industry, economy and commercial real estate sectors. Now featuring broadcasts from major industry authorities RICS, RDM and USGBC. CPN expert blog site, including video! Join the discussion… The digital edition of our monthly magazine Webcasts/Webinars—Special audio and video Webcast series with panel discussions, Q&A and more. www.cpnonline.com 24 COMMERCIAL PROPERTY NEWS • March 2009 • www.cpnonline.com http://www.cpnonline.com/specialties http://www.cpnonline.com http://www.cpnonline.com http://www.cpnonline.com
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