The USA commercial property sector performed well in 2016, but it is still under the radar for most Asia based investors who are missing out on some exceptional opportunities. This is due to a variety of reasons including lack of awareness by investors and concerns over entering a large and diverse market for the first time. However, with the right adviser large and small investors can enjoy the benefits of a secure and attractive income stream and sound capital growth.
The consensus of opinion amongst analysts and commentators is that the USA commercial sector will continue to perform well over the next five years. It has certainly done this over the past thirty five years, having shown average annual returns of 8.8%. With appropriate gearing this would have resulted in returns of 10% plus p.a. and there are few grounds for believing this will not continue over the medium term. As one leading asset manager put it:
USA commercial real estate fundamentals have rarely been stronger. While economic growth has been moderate, the supply of new buildings has been muted, resulting in higher occupancies and rents. In the third quarter of 2015, occupancies among institutionally held properties reached their highest level in fourteen years. The Outlook remains upbeat. Construction has steadily increased over the past five years, but in most sectors and markets in remains below both historic levels and growth in demand.
We are focusing our USA operations on the Chicago market and are carrying out due diligence on several opportunities that offer a real 7.5% p.a. after USA tax. With investment levels starting from US$100,000 and rising to US$20m plus, we believe these will be sound investments for our clients.