Report Finds Foreign Investment Accelerating

While many U.S. real estate investment funds were looking for deals in other parts of the country from 1993 to 1996, a new wave of Asian investors was pouring money into Southern California real estate, according to a report released this week by real estate consultant E & Y Kenneth Leventhal Real Estate Group.

Stymied by limited opportunities and a downturn in many property markets abroad, Asian investors, mainly from Hong Kong and Taiwan, purchased hotels and office buildings mostly from cash-strapped Japanese owners, who bought a lot of real estate in California at inflated prices during the 1980s.

Wealthy Chinese families and government institutions invested more than $1.4 billion in California real estate during the three-year period, according to the Leventhal report. In Orange County, $66.8 million was spent on home building ventures, hotels and retail centers, mainly by Taiwanese and Korean groups.

Jack Rodman, director of Leventhal’s Pacific Rim practice, said he expects foreign investment to accelerate. California real estate is still relatively inexpensive compared with other parts of the world, and Japanese investors are expected to shed $3 billion to $5 billion of real estate each year through the end of the decade, he said.

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Melinda Fulmer covers real estate for The Times. She can be reached at (714) 966-7832 and at melinda.fulmer@latimes.com.