The US has overtaken China to become the world's largest real estate investment market. Optimistic conditions in this market are continuously encouraging investors to look into property in the US. In a conversation with Capital Business, David Gunderson, Principal & Executive VP, US Freedom Capital talks through the fund opportunities offered to non-US investors in this particular market.

What is making the US the world's largest real estate investment market?

Research published on March, 10, 2015 at MIPIM by global real estate adviser Cushman & Wakefield stated, "With better relative economic growth, QE and low interest rates all continuing to encourage investors to spread their interest in property, US real estate investment performance is set to improve further. The US and Canada in fact are leading in some of the key trends changing all global cities, such as technology, sustainability and demographic change.

According to Cushman & Wakefield's annual global capital markets report International Investment Atlas, most of the market is in rude health. The publication forecasts global investment volumes to rise by 11% in 2015 to US$1.34 trillion, led by Europe and the US.

The Americas saw strong investment market performance in 2014 with yields edging down to historic lows in many markets and volumes rising 11.4% to stand at 71% of their 2007 peak.

North America in particular is again leading the global market, with the region's economy an increasing focus for global growth and its property market benefiting from high levels of domestic and international liquidity as well as a recovering occupational sector."

What are the main features of this real estate market that differentiate it from other developed countries?

Historically, investment in US real estate benefits from over 300 years of stable and respected private property rights, with owners foreign and domestic have equal rights in US courts. In the past few years, the strong dollar and volatile international options have pushed international investors to the US.

Many international investors have avoided the US markets in the past due to concerns about yield, taxation and privacy. Many investors are shocked to discover our funds offer 8% p.a. on existing, cash-flowing assets, when they are taking development and construction risk to invest in ME speculative projects. Our funds solve the latter two problems, by investing in a tax-free manner through the Cayman Islands, the investor has no connection to the US tax code or its regulators.

In which states are investors putting their money the most?

In 2013 (the latest national report available) new commercial real estate development in the US was dominated by three states: Texas ($5.4 Billion), New York ($5.2 Billion) and California ($4.9 Billion). (Source: NAIOP Economic Impacts of Commercial Real Estate, 2014 (June) Edition)

What are the fund opportunities offered by Freedom Capital to non-US investors looking into the US commercial real estate market?

With the Funds, US Freedom Capital seeks to offer compelling returns (8% p.a. on existing/cash-flowing real estate and 12% on new development) with the safety and security of the US business environments and courts. Primarily, our investors seek diversification; focusing some of their investment in markets with large promised returns and some in the US with stable and modest returns.

How do you help UAE investors secure US real estate investments while maintaining the tax-free advantage of their country?

From its inception, US Freedom Capital has helped non-US investors with direct investments into US real estate. Using well-established US law, the specific structure of the US Freedom Capital Fund was create to ensure the income received is exempt from US income and estate tax laws. The investor makes an investment into the Fund (domiciled outside of the US in the Cayman Islands), and the Fund then makes an investment into the US real estate opportunity. Thus, the investor never has a direct connection to the US investment.

What other real estate investment opportunities do you offer?

The Fund invests in a variety of institutional grade US real estate investment in the medical, residential, office, hotel and industrial sectors. Investments are made through acquisitions of stabilized cash-flowing properties and ground-up new developments. In addition, we offer private portfolios for clients with balances over $25 Million, which includes select equity investments, development and portfolio management.

How do you expect the global real estate markets' performance to be in the next few years?

Developing markets still have the opportunity for out-sized gains and losses, which can be exciting both going up and down. China has a very difficult deleveraging ahead and we expect a continuation of the flight of its capital to safer domains. Euro-zone real estate, especially residential, benefits from international buyers. The economic and political forecast for the area remains challenged, and commercial real estate is inextricably linked to its economy. The US will continue to increase with the strong dollar, improving economic conditions and foreign investment.

About David Gunderson
David Gunderson is Principal and Executive Vice President at US Freedom Capital. He has built and sold several successful companies in the commercial real estate industry, including architecture, construction, development and finance. His companies have been recognized as Dallas 100 Fastest Growing Companies (twice) and Fortune 500|5000 Fastest Growing Companies.

David has managed, designed and developed over $750 Million of commercial real estate. His clients have included the US Immigrations & Customs Enforcement, the US Secret Service, the US Department of Education, and numerous Fortune 500 companies.

He holds a Series 7 US Securities license.

© Capital Business 2015