For Sale: America

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Equally sharp-eyed Canadian mining companies have snapped up the rights to some 40% of the new gold-digging projects in Montana, Nevada and other Western states. In Northern California, foreign investors have picked up more than two dozen of the region's 300 wineries, among them the Almaden label (now British) and the St. Clement Vineyard (Japanese). In Alaska, Japanese investors control more than one-third of the state's $680 million seafood-packing industry. U.S. farmland might be a bigger target for raiders, except that more than two dozen states have imposed controls or bans on foreign ownership.

Despite the shopping spree, however, the value of U.S. property under foreign control is still only a tiny fraction of America's immense total. (The & estimated value of all U.S. residential dwellings alone comes to some $6 trillion.) But foreign holdings have grown surprisingly large in many lucrative, and occasionally sensitive, spots. Foreign investors now own 46% of the commercial real estate in downtown Los Angeles, for example, according to a survey by the Coldwell Banker Real Estate Group. In downtown Houston, the foreign-owned tally is 39%; in Minneapolis 32%; and in Manhattan 21%.

With so much overseas demand for high-profile U.S. commercial property, competing foreign bidders practically bump into one another at airports. To increase their already considerable bargaining power, many would-be buyers go to striking lengths to conceal their ultimate intentions. The Japanese Komatsu executives who went shopping in Tennessee for a factory kept their state government hosts completely in the dark about what they actually wanted. After a tour of the 1940s-era structure that eventually housed their heavy-equipment concern, the Japanese pronounced it "very dull and scary, very gloomy," recalls John Gregory, a Tennessee official who escorted the group. When the Komatsu executives suddenly announced that they were buying the abandoned plant, says Gregory, "it kind of threw us for a loop."

Japanese businessmen are throwing the U.S. for a loop in a number of ways. Japan, the world's largest creditor country, where consumers save 17% of their earnings (vs. 4% in the U.S.), has the mightiest bankroll of all to engage in buying America. Bereft of enough investment opportunities at home to absorb their astonishing pile of savings, the Japanese are hungrily looking abroad for places to park the excess cash. Japan's direct investments in U.S. real estate and corporations reached $23.4 billion at the end of 1986, a jump of about 18% from the previous year. Predicts Amir Mahini, director of international business research for the McKinsey consulting firm: "In the next two or three years, Japanese investments here will build up very rapidly. It's going to become a torrent."

In particular, the Japanese are taking America's skylines by storm. They have invested an estimated $7 billion ($5.5 billion last year alone) in office towers and other buildings. Oil-company headquarters are a favorite: Hiro Real Estate last month paid $250 million for Mobil Oil's 42-story Manhattan headquarters tower. An older landmark, Fifth Avenue's Tiffany building, was sold last November to Dai-ichi America Real Estate for $94 million. Where landmarks are not available, seascapes will do: in Hawaii, Japanese investors own more than half of the twelve major hotels along Waikiki Beach.