NEWPORT BEACH, CA—A panel of industry experts recently participated in a ULI Orange County/Inland Empire-sponsored discussion about what is fueling foreign investors' increasing interest in American multifamily markets. Tom Warren, COO of Southern California Holland Group; Jerry Fink, co-managing partner of Bascom Group; moderator Dan Cashdan, senior managing director of HFF; Paul Lee, SVP of Landsea Holdings Corp.; and Bill Zhou, managing partner of US-China Real Estate Investment Center, discussed the rising steady stream of foreign capital flowing into the multifamily real estate market.

Both Fink and Warren represent firms that have been actively using foreign capital for recent real estate deals, and Lee and Zhou have represented investment groups from China and were able to provide insight into the strategies and business plans of foreign investors.

The panelists explained that during the 1990s and early 2000s, China's economy was growing at a steady rate, and real estate deals were making between 50% and 100% IRRs with equity multiples between three and five, so there was no need to look outside the country for deals. When the US housing market collapsed during the recession, Chinese investors saw an opportunity to take their money overseas. In conjunction with the recent slowdown of growth in China's economy, they began looking to insert their money into US markets where they felt deals were safer and more transparent and cap rates were still favorable.