Foreign investment pouring into Florida's commercial real estate market, according to CBRE report
In 2015, Florida ranked fourth among U.S. states for cross-border capital flows
Miami, FL – Over the past two years, cross-border capital flows into the U.S. have risen dramatically and in 2015 foreign investment in Florida commercial real estate hit its highest rate in at least nine years, according to a new report by CBRE Group, Inc. Last year, Florida ranked fourth in the nation in terms of cross-border investment volume and the state improved to rank third in Q1 2016. Foreign buying is projected to cool slightly in 2016 relative to 2015, but remains elevated relative to historical rates.
The report, “Florida: A Destination for Global Capital,” describes the factors that are attracting foreign investors to Florida – factors including the state’s rapidly growing population and economy, the powerful global brand of its major cities, and strong cultural and economic ties to Latin America and beyond. In 2015, cross-border capital flows into Florida reached $4.3 billion, a high-point for the cycle thus far and up 85% over 2014.
“Florida has been an attractive destination for foreign buyers thanks to its high rates of job creation and economic growth,” said Quinn Eddins, Director of Research and Analysis, CBRE Florida. “And perhaps equally important is the fact that Florida cities, especially Miami and Orlando, have strong global brands and are familiar to investors all over the world. With their strong economic performance and international renown, it is not surprising that Florida’s cities have been so successful at attracting foreign investment to their commercial real estate markets.”
According to the report, foreign investment in Florida is expected to moderate compared to 2015, but will remain elevated relative to historical transaction volumes. Heightened uncertainty in the global economy will enhance the allure of U.S. markets as safe havens for global capital. Primary gateway markets will receive the most interest from foreign buyers, but Florida, and Miami in particular, should benefit as well
Factors that have contributed to cross-border investment in Florida real estate, according to the report:
- Skyrocketing tourism, particularly in South Florida and Orlando, has facilitated crossborder investment in Florida’s commercial real estate markets as it has increased familiarity with the markets among foreign investment managers and their affluent clients.
- Investors from Latin America and Spain are drawn to South Florida due to strong cultural and linguistic connections to their home countries.
- Miami’s commercial real estate assets are affordable on a relative cost basis compared to assets in other global gateway cities. Assets in other Florida markets – especially Tampa, Orlando and Jacksonville – offer even greater yields at lower cost.
- Poor economic performance in several Latin American countries has prompted an increase in capital inflows from the region as investors have sought a safe haven for their capital.
- In Canada, weakness in the national economy resulting from the contraction in the energy sector and regulatory limits on rent growth for apartment buildings have increased the appeal of U.S. commercial real estate markets, including those in Florida.
- Middle Eastern buyers are increasingly purchasing commercial real estate in the U.S. in search of higher yields and capital preservation.
- Chinese developers established a foothold in Miami in 2014, increasing familiarity with the market among Chinese investors. More Chinese capital is expected to follow as financial market liberalization at home allows investors to increase the international diversification of their portfolios.
For more details from the report, visit www.cbre.com/en/research.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.