Foreign Investors still keen to invest in London, finds report
London has overtaken New York as the top city for real estate investments from foreigners, according to the latest report from the Association of Foreign Investors in Real Estate (AFIRE).
AFIRE’s 2018 Foreign Investment Survey Report found that London has risen through the rankings from third to first choice among foreign real estate investors as their favourite global city in which to invest. New York was number two, down from number one last year; with Berlin, Los Angeles and Frankfurt claiming third, fourth and fifth places.
The 200 members of AFIRE are institutional investors with an estimated US$2 trillion in assets under management around the world. AFIRE questions its members annually and has done so for the past 26 years.
Most notable, from the results of the survey, which was carried out in the fourth quarter of 2017, is that London and the UK in general are climbing back up the rankings as places in which to invest. The UK was ranked as the fourth most stable country in which to invest in real estate, up from fifth place last year. This suggests that investors are less put off by Britain’s decision to leave the European Union than they were towards the end of 2016.
Edward M. Casal, AFIRE’s newly elected chairman and chief executive of global real estate, explained that despite the Brexit vote and the uncertainty it brings, the UK, and London in particular, has enough going for it to retain its calibre as one of the strongest places to invest in the world. He explained: “At the same time, the London market has been buoyed by several large sales over the last year. London has a number of attributes as a location for investment, including a stable rule of law, transparency, and use of the English language. In addition, a favourable time zone for international business, deep labour pool, and cultural attributes also help.”
Looking at the US specifically one of the more notable changes in recent years is the rise of Los Angeles to the second most popular US city in which to invest in real estate. Foreign investors value its attributes, explained Jim Fetgatter, chief executive of AFIRE. He commented: “With the growth of on-line shopping, foreign investors continue to rank industrial / logistics properties as their number one investment opportunity.
“The cargo coming into the Port of Los Angeles represents 43 per cent of all cargo coming into the United States. Respondents also say on-line shopping is likely to have the biggest effect on real estate over the next five years. With these as benchmarks, it’s easy to see why investors would be bullish on Los Angeles,” he added.
With regards to the most popular countries in which foreigners like to buy and invest in real estate, the US has remained in the top spot. However, Germany accounted for two in five of the votes cast by AFIRE members. Canada, the UK and Australia completed the top five in third, fourth and fifth positions.
When questioned about their concerns in the coming year, the members said they worried about the impact that emerging technologies will have on some categories, such as retail units. They were also concerned about interest rates, high valuations, financial market disruption and oversupply in some areas. With all this in mind, the US is still firmly at the top of rankings – offering the best opportunity for capital appreciation.
Brazil topped the list for potential, however, ranking number one on the list of emerging markets. This was followed by China, India, Mexico and Colombia.