As commercial rents and residential prices soar in New York City, Chicago, Miami and Los Angeles, foreign investors are chasing higher yields in unexpected secondary markets with stronger growth potential.
Chinese and German investors are increasingly looking to cities like Philadelphia, Denver, Atlanta and Phoenix, according to Bloomberg. Citing data provided by CBRE, the outlet reported that Philadelphia experienced that largest growth, recording a massive 516 percent uptick in the first three quarters of 2018 from the same period in 2017.
“Yield is king and yield is now being found in less-usual suspects,” Spencer Levy, Americas head of research at CBRE, told Bloomberg.
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Canadian investors topped the foreign investors list, a position it has occupied for a decade. Canadian firm Starlight purchased a 335-unit luxury apartment complex in Phoenix and took a $33 million majority stake in an Atlanta apartment complex this year. “We were increasingly seeing that jobs were moving from traditional Northeast and Northwest corridors into the sunbelt states,” Raj Mehta, the company’s global head of private capital and partnerships, told the outlet.
Despite increasing investment in second-tier markets, New York and Los Angeles reportedly still saw the highest volume of foreign investment, with $15.1 billion and $7.7 billion respectively, this year.
This comes as a dip in Chinese investors begin pulling their money out of the U.S., amid Chinese government controls. Hong Kong and mainland China investments in the U.S. property market totaled $4.42 billion through October, compared with $6.81 billion in all of 2017. [Bloomberg] — David Jeans