When New York's iconic General Motors and Chrysler buildings were sold earlier this year, thanks in part to an injection of foreign capital, comparisons to the 1980s when Japanese investors poured billions of dollars into some of America's most prominent real estate, were inevitable.

New York-based research firm Real Capital Analytics estimates that foreign investment in U.S. real estate approached $4.17 billion in the third quarter. While that's a healthy figure, it pales in comparison with the all-time high of $6.46 billion notched in the second quarter of 2007. This time around the major players are based in oil-rich countries like the United Arab Emirates, Kuwait and Norway, as well as South Korea.

“We're seeing some big deals happen every day,” says Robert White, president of Real Capital Analytics.

But the turbulence involving Lehman Brothers' filing for Chapter 11 bankruptcy protection on Sept. 15, the swift sale of Merrill Lynch and the government's rescue of insurance giant AIG, have made some overseas investors wary of U.S. markets.

“This whole Lehman thing has everybody stopping to wait and see what will happen,” says Steve Collins, managing director of Jones Lang LaSalle's international capital group. “Some investors are still waiting for distress, and they're thinking prices might go down at the end of the third quarter after this Lehman thing settles.”

Foreign buyers likely will be more cautious for at least the remainder of this year until a semblance of stability returns, adds Collins.

Foreign buyers snare GM trophy

The largest of the recent mega deals was the $4 billion sale of New York's GM Building along with three New York office towers at 2 Grand Central, 125 West 55th Street and 540 Madison Avenue by Harry Macklowe to a group that included Boston Properties, Goldman, Sachs & Co. and a joint venture of the governments of Kuwait and Qatar.

In June, the Chrysler Building sold to the Abu Dhabi Investment Council for $800 million. And in late August, Israel-based Africa Israel Investment sold stakes in two Manhattan office towers to an unidentified Chinese investment fund for $200 million.

One of the biggest questions today is what impact Wall Street's travails might have on foreign investment trends. The U.S. government's takeover of Fannie Mae, Freddie Mac and AIG, plus Lehman's bankruptcy and subsequent sale in part to U.K.-based Barclays PLC, may signal a market bottom and trigger a buying opportunity for foreign capital.

Collins has met with at least 25 foreign investors — groups from Norway, Spain and South Korea, in particular — who are examining U.S. properties for purchase. None has previously invested in the U.S.

“They are looking to get into the States through direct investments, joint ventures and debt,” says Collins. “There are still a lot of people looking to place money, and the majority of them are from the Asia-Pacific, Spain and Norway. Their economies have risen quickly and now they want to get their money out throughout the world, and the U.S. is a good place for it.”

Several major investment groups are gearing up to launch U.S. investment programs, Collins says. The largest is the $370 billion Norwegian Government Pension Fund, which is ready to invest some $30 billion in foreign real estate, with the U.S. as a potential target. Earlier this year, the fund hired a group that owns U.S.-based Pension Consulting Alliance, the prominent advisor to several top American pension funds.

The investment role of South Koreans is rapidly changing, following recent updates to complicated Korean tax laws that now provide more incentives for investing overseas. “This time last year there were probably seven Korean investors, but by the end of this year, thirty or so will have been formed to invest money outside their region,” says Collins.