Propmodo Daily

Greetings!

The 2020s have seen a shift from globalization towards protectionism. One example is the new IRS regulation (TD 9992), which imposes tax restrictions on non-American investors in domestic REITs, requiring that at least half of a D-REIT's investors be American to maintain tax benefits. As discussed in today's email, this regulation aims to curb foreign investment in U.S. real estate, ostensibly to help housing affordability, but it seems to be driven by political optics.

Despite a slow start in U.S. EV sales and setbacks from major manufacturers, the market is growing, with significant sales increases among top EV makers. Commercial property owners are seizing the opportunity to install EV charging stations. However, our new article highlights that without careful evaluation and strategic planning, this could lead to higher expenses, a stressed power grid, and missed revenue opportunities.

This week in Propmodo Technology, we explore multifamily management, discussing how apartments are using rewards programs to retain tenants as the rental market softens. We also examine whether smart home technology is making apartment living easier or more complicated, and how multifamily properties can be future-proofed with smart access control.

Now, let's dig in!

Protectionist Politics Are Shaping the REIT Landscape

In 2005, Thomas Friedman published his influential book The World Is Flat. In it, he examined how the economic playing field had been leveled by decades of globalization. If the early 2000s can be described as the pinnacle of the age of globalization, the 2020s can be seen as the height of the age of protectionism. The globalized economy has made trade and commerce a new battleground, and countries are constantly finding new ways to give their citizens an advantage.

We are starting to see protectionism affecting the real estate investing world as well. One example is the new IRS regulation (TD 9992) that limits the tax advantages of investing in “domestic” REITs for non-American investors. Currently, foreign investors in domestic REITs don’t have to file a return or pay taxes on the gains from investing in a REIT. But the new regulation will require that at least half of a D-REIT’s investors be American, otherwise, it will lose the domestic REIT designation and the tax benefits that go with it.

There is a ten-year transition period for this new regulation, so the changes won’t be felt right away, but it is only a matter of time before some funds start limiting the number of foreign investors. The anticipation of this investment supply shortage might be one of the reasons why Europe, Asia, and the Pacific have seen the largest global share of new REIT offerings in the last few years.

American real estate has always been an attractive investment to foreign investors, and REITs are one of the easiest ways to invest in U.S. property. This used to be seen as a good thing—more investment capital coming into the country only helps the economy. But now political talking points have changed. Fair or not, large corporations buying up property are seen as a contributing factor to the housing affordability problem. Foreign buyers, especially those who are not paying U.S. taxes, are an easy target for politicians and regulators who want to be seen as protectors of the constituents that get them elected.

Featured

Insider Insights

🪑 Butts in seats: A new survey of employers found that 93 percent of them supported return-to-office mandates.

🧸 Venture too far: The struggling Chinese developer Country Garden is considering selling its stake in the Chinese computer chip manufacturer CXMT to help it pay back its creditors.

Overheard

Propmodo Technology: Multifamily Management

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Explore Propmodo

• Read exclusive articles about a variety of topics, including Real Estate, Workplace, Buildings, and Development.

• Browse our collection of interactive Propmodo Research e-books.

• Sign up for upcoming Propmodo Live Webinars or watch past Propmodo Live videos on-demand.

• Dive into Propmodo Technology articles, podcasts, and short videos about the future of commercial real estate.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.