Today, the real estate market is experiencing record cash sales from international buyers who are gobbling up large chunks of property. Through the first quarter of 2015, commercial real estate transactions increased by 45 percent. One of the most significant deals occurred as General Electric Company sold approximately $23 billion in assets to Wells Fargo & Co. and Blackstone Group LP. As more money is invested in commercial real estate, competition for top properties is forcing investors to make bulk purchases, which may lead to a record-breaking second quarter.
Thanks to low interest rates and overseas investors who need a haven for stockpiled cash, demand for large properties is booming. This surge is a driving force for recovery of the real estate market. As the U.S. economy keeps improving, it is becoming easier to draw foreign investors and sell property. Also, lenders are loosening their standards after the financial crisis, which makes it simpler to acquire funding for large transactions.
Differences from Bubble-Era Deals
The rise in large investments, record-setting prices, and low credit rates bring memories of the time preceding the recent financial crisis. However, there are key differences that place confidence in the idea there will not be a similar meltdown. Today, investors are putting more cash down so that it is easier to pay mortgages and more difficult to walk away. Also, lending is more restrained, and low levels of construction are keeping established property demand high. This is good news for anyone involved in the real estate market.