NEWPORT BEACH, CA—A panel of industry experts recentlyparticipated in a ULI Orange County/InlandEmpire-sponsored discussion about what is fuelingforeign investors' increasing interest in Americanmultifamily markets. Tom Warren,COO of Southern California Holland Group;Jerry Fink, co-managing partner of BascomGroup; moderator Dan Cashdan, seniormanaging director of HFF; Paul Lee, SVP ofLandsea Holdings Corp.; and BillZhou, managing partner of US-China Real EstateInvestment Center, discussed the rising steady stream offoreign capital flowing into the multifamily real estatemarket.

Both Fink and Warren represent firms that have been activelyusing foreign capital for recent real estate deals, and Lee andZhou have represented investment groups from China and were able toprovide insight into the strategies and business plans of foreigninvestors.

The panelists explained that during the 1990s and early 2000s,China's economy was growing at a steady rate, and real estate dealswere making between 50% and 100% IRRs with equitymultiples between three and five, so there was no need to lookoutside the country for deals. When the US housingmarket collapsed during the recession, Chinese investors saw anopportunity to take their money overseas. In conjunction with therecent slowdown of growth in China's economy, they began looking toinsert their money into US markets where they felt deals were saferand more transparent and cap rates were still favorable.