Amid a volatile U.S. market, American investors eyeing real estate may be looking to Europe to offer a more stable and welcoming environment. The reasons may be varied— perhaps your clients are seeking a closer tie to family or cultural heritage, want to expand their business interests into new markets for marketing, production or logistics purposes, are pursuing a passion project such as a winery, or are looking to diversify their economic or political exposure. Whatever their interest, it’s important to identify a particular submarket, understand its growth drivers, demographic composition, and economic incentives before making a move.

Europe is Open for American Investment

European governments, trade associations, and business development agencies are very receptive to working with American businesses wanting to establish themselves in Europe. A strong local advisor can help negotiate on behalf of clients to get attractive deals, tax holidays, and other preferential treatment. The recent trade disruptions have focused on European companies setting up in the U.S. However, trade is a two-way street, and the winds of trade do change. This means that prudent forecasting, sourcing, and market access requires a local presence in markets relevant for a company wanting to sell its products and services. Europe, like America, has talent and goods that the other needs and wants.

Currency Hedging Considerations

If, as part of the investment, an investor wants exposure to another currency, then no hedging is required. However, if the focus is on the asset, and they do not want to take currency exposure, or risk an adverse exchange rate movement, then hedging is your solution. Hedging works by entering into a contract with a party (who must have an acceptable credit and performance standing) to take the foreign exchange risk that you have by buying an asset denominated in another currency. Hedging is also used to convert a floating interest rate exposure into a fixed-rate obligation, and vice versa. For example, a property is purchased in Switzerland in Swiss francs and financed with a floating rate mortgage. However, as a U.S.-based investor, the owner would prefer to have a U.S. dollar revenue stream from the investment and U.S. dollar mortgage obligation. A currency swap and an interest rate exchange swap will achieve these objectives. Effectively, the Swiss investment remains a Swiss investment, but with U.S. dollar financial flows.

Having Local Eyes on Your Investment

Cross-border investment can be an essential part of a diversified portfolio, but entering a new market, especially amid times of changing tax and trade policies can be daunting. U.S. wealth advisors should look to global real estate networks with strong local members who are able to understand the nuances of a locale and help navigate the regulatory and financial implications of a deal. In addition to superior local market knowledge, it is essential that the local advisor understands the client’s objectives.

Daniel Shindleman, President of Bridgemer AG/CORFAC International, is an alternative asset manager and advisor focused on sustainable real assets, namely agriculture, infrastructure and real estate globally. He is responsible for investment sourcing and structuring with a particular focus on equity investment.  He serves as the 2025 President of CORFAC International, the premier network for independently owned commercial real estate firms with 70 offices worldwide.