Learn More About How Brexit Will Affect The United States
Since voters in Britain voted to leave the European Union (EU) on June 23rd, 2016 many economists have wondered how this decision would impact financial markets around the world including multi-family investments in the United States.
In the days following Brexit one thing is clear, we know that the financial markets are a lot more connected than we thought and what happens in the EU financial markets does affect the financial markets in the United States including multi-family investments here.
More Investors Will Turn To the United States
Thanks to recent report from Axiometrics and forbes.com we know that most economists feel that investors in Britain and across Europe will turn their attention to the United States financial markets, including multi-family investments here, because the apartment market in the U.S. is one of the strongest in the world, especially in cities like Portland, where we’ve had consistent rent growth rate over the last 12 months.
There’s no denying that multi-family investments in the United States remain attractive to investors, especially international investors since they’ve been gradually increasing their investments and holdings in the United States apartment market over the last several years.
Recent statistics from Real Capital Analytics (RCA) shows us that investors from Britain and abroad sunk over $16 BILLION dollars into investments here in the United States last year. What’s interesting about this statistic is that $2 billion was invested from Great Britain while the lions share ($11 BILLION) was invested from Canada, our neighbors to the north.
Many analysts predict that more British real estate investors will turn their attention to investing in U.S. Real Estate as it’s expected to take at least two years for Great Britain to be fully divorced from the EU, and during this time many analysts feel that markets in the United Kingdom will continue to be a roller coaster ride as Great Britain works out new trade deals with the EU, and once again becomes completely self-reliant for the first time since 1973.
Multi-Family Investments Remain Attractive
Here in the United States multi-family investments come in the form of apartments, condos, senior housing and commercial real estate which includes office, industrial, and retail. As of 2015, and into the first quarter of this year, multi-family investments accounted for close to 30% of the average real estate portfolio since it’s been far more profitable over recent years than any other traditional investment.
One of the biggest reasons why international investment in U.S. Real Estate has grown in recent years can be traced to the fact that the United States Government has made international investment easier for investors in Great Britain and other countries because an investor who lives abroad can buy up to 10% of a Real Estate Investment Trust (REIT) before they incur any Federal taxes.
Since investing in the United States multi-family market is so attractive many experts predict that we will see more investors from Great Britain, China, and other countries turn to investing in the United States multi-family real estate market, especially in cities like Portland, Seattle, San Francisco and New York where there has been huge rent growth over the last 12 months.
Brexit’s Impact on Middle East Investors
For investors in the Middle East there’s never been a question before about investing in Great Britain but, thanks to Brexit they could be changing their minds about Britain, especially if they see a fall in profitability there and economic instability following Britain leaving the EU and those Middle Eastern investors could also turn their attention to the apartment market in the United States over the next two years.
What’s interesting about Brexit though is that even though it may shake up the multi-family market in Britain, it could open up the door for investors in the United States to invest in the U.K. apartments and other rentals if prices plummet and investors are able to buy flats in London at low prices.
Brexit has shaken up Europe for sure but what would have happened to multi-family investments in the United States if Britain had voted to remain in the EU instead of leave? Many analysts feel that the multi-family real estate market in the United States would have continued growing steadily as the stock market and other economic conditions in the United States continued to improve so Brexit will only make real estate investments appreciate even more as investors in Britain invest in multi-family properties here in the months and years to come.
Property Managements Impact Following Brexit
Reliable property management in the United States will become even more important for investors in Britain and around the world who decide to invest in multi-family properties following Brexit because we are an investor’s first line of defense at making sure their rental properties are professionally managed, and they are paid rent on time, regardless where in the world the investor might be located.
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