U.S. commercial real estate is the midst of a big foreign investment boom that is likely to continue, according to one prominent expert.
China is leading the boom, but money also is coming from Canada, Norway, the Middle East and elsewhere, Jonathan Gray, global head of real estate at Blackstone, said at the Delivering Alpha conference presented by CNBC and Institutional Investor.
While under other circumstances a big inflow of foreign capital might indicate the market was about to hit a top, Gray said that's not the case this time around.
"It's always easy to say foreigners are showing up, therefore it's the top of the market. It's the Japanese with Rockefeller Center, that kind of thing," he said. "I don't think that's always the case."
Conditions now on several levels are different, Gray added, drawing a distinction between the current market and the crash that happened in the last decade that triggered the financial crisis.
High levels of debt and surging prices triggered a bubble that exploded when a wave of defaults crippled the subprime residential market, with damage spreading to commercial.
"We have a lot less leverage in the system. Back then people were 90-plus percent levered," Gray said. "We had a lot of building going on and we were late in an economic cycle. We don't have those conditions today. That would argue that real estate is going to do fairly well in the next couple of years."
Warning signs, then, would be high levels of debt and overbuilding, which he conceded is happening in some areas.
"There's not a ton of building going on, leverage in the system is reasonable and we still think this economic cycle has a bit of a ways to go," he said. "That's why we're optimistic."
As for other hot spots around the world, Gray said he's bullish on Brazil, China and locations in Europe.