Whiles some U.S. markets enjoy an influx of investment from overseas, domestic companies, too, are striking at hot opportunities in global markets that offer an attractive return on investment.
Multifamily executive David Woodward recently moved to London from Denver after recognizing opportunities to drive U.S. development there that could help the British city combat its housing crisis. Woodward's new company, SVN | CompassRock, is one of the largest real estate advisory firms in the world, providing asset and property management for both multifamily and commercial properties, with a specialized division for large regional malls that often offer housing redevelopment opportunities.
Woodward is advising companies that want to bank on new opportunities to move purpose-built projects to markets such as Berlin, Sydney, and London, that have the same housing challenges and the same demographic pressures the U.S. faces. An added factor is the strength of the dollar right now, making it easier to invest, according to Robert Dietz, senior vice president and chief economist at the National Association of Home Builders.
“A strong dollar is placing pressure on exports, increasing imports, and making the trade deficit worse,” Dietz says. He attributes the strong dollar to concerns about economic weakening in Europe that's leading to investors buying more dollars, in addition to higher U.S. interest rates, which also attract dollar buyers.
Indeed, London has seen domestic investment decrease 100% in the past year, notes Real Capital Analytics' (RCA's) third-quarter Global Capital Trends report, which highlights domestic and overseas players in some of the world's most active housing markets.
Byron Carlock, national partner, real estate practice leader at PriceWaterhouseCooper, sees a trend in which more international investors are coming to the U.S. than are domestic companies taking their money overseas.
“There are some nice exceptions,” says Carlock. “We’re starting to see people playing around the edges, like taking college housing concepts from the U.S. abroad. However, other multifamily developers aren't going abroad because they don’t want international expansion on the balance sheet.”
According to the RCA report, Greystar is firmly in the former category as one of the largest buyers globally, with more than $31 billion in assets under management overseas.
Sherry Freitas, managing director of international property operations at Greystar, says the firm initially entered the global market after helping a client on some underperforming deals in Mexico, which made Greystar aware of the need for more purpose-built housing around the world.
Greystar then seized on student housing opportunities in the United Kingdom, creating a brand there called Chapter. Freitas says there was an obvious demand, and that existing U.K. product was basic, allowing Greystar to offer a competitive advantage with its experience in higher-end product and its attendant community spaces and amenities.
Next year, the Charleston, S.C.–based company's international presence will expand further, as the firm raises funds for new development pipelines in South America, Europe, and beyond.
“In 2019, we’ll have country leaders in Chile, Germany, France, and Australia,” says Freitas. “We’ll continue to look at markets that fit what we do and to see good returns for our investors.”
Back in London, in this exclusive interview with MFE, SVN | CompassRock's Woodward discusses the overseas opportunities he sees for U.S. developers:
With evolving technology and access to data shifting the world's capital investment structures, the global market may present even more opportunities to U.S. developers in the coming year, perhaps even attracting more capital to U.S.-based projects.
Tomorrow will tell.