Chicago's continuing rise to prominence on the world stage was further boosted by the latest figures indicating that 2015 will not only be a banner year for new construction and hotel occupancy, but a record-breaking period for foreign real estate investment as well. 2015 saw $3.27 billion of new overseas capital flow into the Windy City, according to recently published report by Crain's Chicago Business, a figure that shatters the previous record of $2.18 billion set in 2013. Citing data from New York-based Real Capital Analytics, Crain's reports that foreign buyers accounted for roughly 16 percent of Chicago's total $20.2 billion of real estate sales this year. Chicago now ranks as the fourth largest market in the nation for foreign investment — up from last year's eighth place — and trails behind only New York, Los Angeles, and Washington D.C.
These positive figures are attributed to several factors. Oversaturation of traditionally stronger coastal markets has driven up prices to the point where commercial investors are often finding more lucrative opportunities in Chicago. Chicago is seen as a somewhat riskier choice for firms taking on commercial properties due to the relative ease at which new buildings can be added and tenants relocated — similar to CNA's announcement earlier this week — but foreign buyers willing to take on this risk have enjoyed greater returns. In 2015, investment in Chicago saw first-year rates of return ("capitalization rates" for you finance-minded folks) averaging 5.1 percent, outperforming the 4.1 and 4.7 percent yearly yields of Manhattan and San Francisco, respectively.
All of this is great news for the city. Chicago can most likely expect this high level of global investment to continue in 2016, though not without some potential challenges. Depressed energy prices and the looming Chinese economic slowdown may negatively affect the ability of some, though certainly not all, foreign investors to deploy their capital stateside. Overall the forecast for Chicago looks positive as news spreads of the Second City's low prices and high returns.
·Foreign investment in Chicago real estate hits a new high [Crain's]
·Market Reports archives [Curbed Chicago]