Investors looking to invest in real estate abroad may be able to turn to our government here at home for deals. The United States Department of State owns and leases property throughout the world, and when owned properties are replaced or no longer needed, they are often sold to the private sector. By keeping an eye on these government property listings and staying up-to-date with future plans to sell property, investors may be able to find some great deals around the globe.
The State Department manages approximately 17,000 owned and leased properties in its portfolio. In a typical year, about 1,200 of the leases will roll over and be swapped out while 15 to 25 properties will be made available for sale, according to Jay Hicks, managing director of planning and real estate for the Bureau of Overseas Buildings Operations, U.S. Department of State.
Prior to being sold, these government properties serve a wide variety of purposes. Most commonly the properties have been used as embassies or chanceries, but they could also be single-family residences, condominiums, warehouses or, occasionally, undeveloped lots, Hicks said. Typically, these properties are offered for sale once they no longer suit the needs of the U.S. Department of State. Once the properties are deemed to have surpassed their usefulness, they go through an appraisal process to determine the property’s value in the market. A local broker is generally hired to market the property on the State Department’s behalf.
The Department of State places foreign properties for sale steadily throughout the year
“We are very good and aggressive about not wanting to hold onto properties we don’t need any more,” Hicks said. “By the time we’ve identified a property to sell, hired a broker and put it on the market, we’re motivated to sell it because it’s simply maintenance and carry costs for us that we’d rather not carry. We’re motivated to sell it because we want to avoid those costs, and...because we retain the proceeds here at the State Department. We have every incentive to move that process as quickly as we can.”
Overseas properties that are available for purchase are listed on the State Department’s website. The number of properties sold each year tends to stay fairly stable, and no particular point in the year is more or less conducive to finding good deals.
“It’s a pretty steady state of release throughout the year,” Hicks said.
The deal-making process is likely to take anywhere from 30 days to six months, depending on the property in question and the nature of the negotiations. Some properties may require zoning changes, depending on what they were used for and the planned uses the buyer has for it. Offers are often received in both English and the language of the host country, but the final binding contract is written up in English, according to Hicks.
Investors interested in purchasing one of these government-owned foreign properties can look over the State Department website. Properties are listed by location and by property type. If a particular property is of interest, investors can get in touch with the State Department through the website. Additionally, if investors are interested in properties available in a specific area, they can get in touch with the embassy in that location for more information on properties for sale.
To keep an eye on possible future properties that will be available from the State Department, it may be wise to consider where they are building and buying properties now.
“Anyplace where we plan on building is a place we plan on getting out of,” Hicks said. “Look at where we’re building embassies to get ahead. We’re interested in building a new embassy in Mexico City. It’s common knowledge, and we’ve had people come in and ask what we’re doing with the old building.” Investors can scour the State Department website for news on where new construction is being undertaken, and it is a good bet that two or three years later the building being replaced will be available for purchase.
Selling property is only a small part of what the U.S. Department of State Bureau of Overseas Buildings Operations does. It manages a $1.4 billion annual embassy construction program. “Building safe, secure and functional facilities is the heart of what we’re doing and we’ve enjoyed tremendous Congressional support,” Hicks said. Interested investors can use this program to their advantage by keeping on top of the Bureau’s plans and getting into position to purchase desirable government properties as they become available.
