SAN DIEGO-The return of construction lending and a generally more positive attitude toward construction are signs that point to a recovering market, said speakers at RealShare Investment & Finance here yesterday. Speakers said they would consider doing a deal where there was a takeout on construction—a forward—which may not have been considered during the recent economic downturn.

In fact, lenders would even consider working with borrowers that have gone through a bankruptcy during the downturn, provided the borrower had a cooperative attitude during that time and the underwriting were carefully constructed, said Rudy Kramer, SVP, regional director commercial real estate with California Bank & Trust.

Moreover, fears over the GSEs reaching their funding limits before the end of the year are unfounded, said Eric Flyckt, SVP & managing director for Northmarq Capital. “Fannie Mae is on track to do $30 billion and is looking at high-quality deals and newer properties. It's business as usual. Freddie Mac would run out of money faster than Fannie because they look at higher loans.”

In addition, a surge in capital into US properties from foreign investors indicates the confidence international buyers have in the US market, considering it a safe haven as compared to investments in their own markets. “We have seen this in many asset classes and property types,” said Anton Qiu, principal at TRI Commercial/CORFAC International.

Foreign investors are noting “very attractive cap rates compared to what we see globally,” said Paige Mueller, managing director for RCLCO. “There's a lot of construction happening in high-growth emerging markets.” Frederick Gortner, managing director of Paladin Realty, added, “There's great growth in value-add for all foreign investors.” Stephan Kachani, VP of Lone Oak Fund, said we are seeing a lot more investment from Russia and Asia, and Qiu said that mainland China has become one of our most prominent investing countries.

One disconnect with foreign investors is their fear of investing in suburban markets. “They don't understand the dynamics behind it,” said Amy Erixon, principal and managing director, investments, for Avison Young. But, she added, there is an evolution to their understanding of these markets.

As GlobeSt.com has previously reported, working with foreign investors and tenants requires doing one's homework and understanding the particular culture. For example, when dealing with Asian investors, being seen as an advisor rather than a broker is helpful since the term “broker” carries “very low social status in most Asian countries,” said Qiu. Also, avoid addresses with lots of 4s in them since 4 is considered an unlucky number in Asian cultures.

In addition, political gridlock in Washington, DC, is hindering foreign investment to some degree. “Lack of political clarity is not helping,” said Erixon. “Foreign investors want to know when interest rates are going up, how soon and in what form they will take.”