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How Brexit could affect real estate markets

On Behalf of | Jun 28, 2016 | Commercial Real Estate |

California residents have no doubt heard about the United Kingdom’s decision to exit the European Union. After the Brexit vote was tallied, the U.S. stock market had a decidedly negative reaction to the event as stock prices went down on June 24. However, shares of real estate investment trusts went up after the Brexit vote.

Real estate investors may be feeling more confident about the value of U.S. properties now due to uncertainty in overseas real estate markets. Some analysts say foreign investors from China and the Middle East will now be more likely to purchase properties in New York than in London. While U.S. retail, apartment and office space was already popular with foreign investment firms, Brexit could make those properties even more popular.

San Francisco and New York City are some of the most popular real estate markets for foreign investors. Many institutional investors choose to buy U.S. properties because they are a stable investment where they can store a lot of their wealth. Rather than purchasing properties to sell in a few years, foreign investors are often looking for a place to simply park capital. For the most part, real estate investment trusts in the U.S. have not caught on with foreign investors.

A real estate investor in the U.S. may be able to earn a substantial profit by selling properties to a foreign investment firm. However, an international commercial real estate transaction will often be more complicated than a transaction that only involves U.S. buyers, making the assistance of an experienced attorney even more advisable.