Discussions with Israeli and European investors over the course of the last year indicate a wide variety of U.S. real estate investment interest. Core central business district office properties in major markets, multifamily/residential in locations with projected long-term positive demographics, and retail, including both grocery-anchored neighborhood retail as well as major mall properties, came up most frequently. Industrial, hospitality, and mixed-use projects came up far less frequently.
Regardless of property type, foreign investors uniformly are interested in taking advantage of depressed U.S. prices, as well as a scarcity of financing, to drive good deals in the next year or two. They believe that in many cases property valuations are the lowest they have been in 15 or even 20 years, notwithstanding the fact that many properties have ongoing solid cash flow and stable rental income in place.
Foreign investors also prefer off-market opportunities or properties that are being quietly marketed, rather than those where they have to bid competitively in the open market. Foreign investors are not afraid to use discounted debt acquisitions as an indirect vehicle that ultimately will lead either to acquisition of the underlying assets or favorable loan repayment terms.