Editor’s note: Atlanta’s real estate boom is palpable these days as cranes continue to dot the Atlanta skyline, but less understood is the role of foreign investors in the sector’s growth. In this Q&A sponsored by Arnall Golden Gregory LLP, Global Atlanta caught up with Abe Schear, who has been active in facilitating investment from Israel and beyond in the real estate and retail sector, for some perspective. The two-minute video below is provided by AGG.
Global Atlanta: Atlanta is experiencing a real-estate boom at the moment, especially in town. How much of that is fueled by foreign capital, and how much of the higher pricing we’re seeing is due to their influence?
Abe Schear: Atlanta is very much on the radar of international investors who are very active on the buy side and, to a bit lesser extent, on the sell side. This has for certain been a factor in reduced cap rates (and higher prices). Of course, we are also seeing significant interest for large institutional investors who have in some cases been under contract to buy projects well before they are completed.
GA: How have foreign investors’ perceptions of Atlanta changed since you’ve been reaching out to them?
AS: In 2005, Atlanta was very much a secondary market, one which had strong investment from Germany and Japan, but lesser so from other investors. Investors in the last decade have become educated about this region, as well as cities that have large universities or state capitals — think cities like Athens, Ga., or Lincoln, Neb. That has resulted in significant investment in markets which were not deemed to be core markets. Additionally, some international investors are now developers as well as buyers, a concept that was very rare in 2005.
GA: What factors are driving foreign investment in the real-estate sector locally and in markets like Atlanta elsewhere in the U.S.? It seems like the South in particular has come on the radar in new ways…
The Southeast (and Texas) have benefited from a story of growth and the perception that with growth will come higher rents. As for development, it is quicker and easier to do so in the Southeast than in core Northern markets.
GA: From which countries are you seeing the most interest and investment?
AS: Certainly from countries like Israel but so to from countries that have political issues and a lack of predictability, such as Turkey. Atlanta is now remarkably diverse, and that has helped to educate investors who now have friends and business partners here.
GA: How can communities, real estate professionals, attorneys and other businesspeople position themselves best to help usher in this investment?
AS: Find an organization, an international group, to join which interests the person. Volunteer and ask questions. Learn about the needs and the culture of the investor.
GA: Give us a sense for your strategy over the years in engaging with Israel and other countries — and how it has paid off both for the firm and for your personal enrichment.
Knowing people form so many countries makes the world all the smaller. It makes reading the news all the more focused. Whether it is an earthquake in Malaysia or an election in Poland, being involved makes one have a natural empathy for friends far and wide. A strategy has to be realistic but significant business has come from educating people in our region. We’ve become more valuable and more recognizable. It has been a fabulous adventure.
Abe Schear is Global Real Estate and Israel Business Practice Leader at law firm Arnall Golden Gregory LLP. He can be reached at firstname.lastname@example.org
Read more from Mr. Schear: Commentary: Investors Drawn by Atlanta’s Intellectual Capital