Brexit fears could lead to a surge in American CRE buying

Commercial real estate in Illinois and around the country has been viewed as a relatively safe investment by overseas buyers in recent years, and increased global economic volatility is expected to result in even more foreign money being put into American commercial properties in 2017. Most financial analysts were shocked in June when British voters chose to leave the European Union, and they say that fears over the full impact of Brexit are among the reasons that American properties are still seen as a prudent hedge against an uncertain future by foreign investors.

News of the Brexit vote raised concerns about the future of the British economy, and investors around the world have been clamoring to get their money out of the U.K. for the past several months. Seven leading investment funds in the U.K. have ceased trading to stem the outflow of capital, and commercial real estate values in major British cities have been falling along with the value of the pound. While London was once viewed as a reasonably safe real estate bet, European and Asian investors are now turning their attention toward cities in the United States like Chicago, New York and Los Angeles.

Overseas investors like commercial properties in these cities because rents are among the highest in the world and the U.S. economy is viewed as being well positioned to weather future economic turbulence. In addition to worrying about Brexit fallout, overseas investors are becoming increasingly concerned about spiraling debt and plummeting stock values in China. A flurry of sales despite poor fundamentals has some analysts predicting that the Chinese real estate market may soon be coping with the kind of crisis that the U.S. housing market faced in 2008.

Skilled investors balance their risks and returns carefully, but unexpected events can wreak havoc with even the most meticulously made plans. While doing business with foreign investors may be more straightforward in a global economy, these deal are often complex and negotiations can be difficult. Attorneys with experience in these types of transactions may be able to expedite matters and help their clients to avoid cultural, financial and legal pitfalls.

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