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Foreign Investors Look to Land for Profits

NEW YORK CITY-Foreign investors are snatching up land assets in the US in anticipation of the next real estate cycle.

By Erika Morphy | Updated on February 10, 2008

NEW YORK CITY-Foreign investors are interested in US commercial real estate, thanks to favorable exchange rates. Private equity firms and other funds are increasingly targeting land parcels in this country in anticipation of the next real estate cycle. Now, it appears that the twain is about to meet.

“We are seeing strong interest from the European market in the US real estate markets — with a particularly strong interest in land investments where there is a long time horizon and a low leverage play,” Anthony M. Graziano Jr., associate managing director with Integra Realty Resources, tells GlobeSt.com. The current woes of just about all residential builders are an added plus, as these firms are being forced to sell entitled land at deep discounts in order to keep shareholders satisfied, or even just stay afloat.

US funds, as well, are targeting land purchases for the same reasons, according to David Reiner, managing director of Capital Markets of Grosvenor Investment Management. “Homebuilders either have to write off the value of land they bought at highly inflated prices to more realistic numbers — or they need to sell it to get cash,” he tells GlobeSt.com.

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