Among foreign investors, interest in New York has slipped and London has assumed first place as the number one global city for real estate investments, according to the results of a new survey taken among the members of the Association of Foreign Investors in Real Estate (AFIRE).
“A year later, foreign investors are less concerned about the ramifications of Brexit,” said Edward Casal, AFIRE’s newly elected chairman, and chief executive, global real estate, of London-based Aviva Investors. “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 favorable time zone for international business, deep labor pool and cultural attributes also help.”
For the first time, Los Angeles has tied New York as the number one city in the United States. In last year’s survey, London ranked third globally; Los Angeles ranked second among U.S. cities and fourth globally.
Rounding out the list of top five global cities, in order, are: New York, Berlin, Los Angeles and Frankfurt.
Significantly, San Francisco, which has been on investors’ top five global cities list since 2011, fell into 11th place, and Washington, D.C., continued its slide among global cities, falling from 15th place last year to 25th this year.
New York had been named the top U.S. city for the last seven years, holding a substantial lead over Los Angeles. As recently as 2014, Los Angeles was in fifth place among U.S. cities. It only moved into second place in 2016. The remaining top five U.S. cities, in order, are: Seattle, Washington, D.C., and San Francisco. Seattle moved up from fourth place and Washington, D.C., rejoined the list after falling off into sixth place last year.
“With the growth of online shopping, foreign investors continue to rank industrial/logistics properties as their number one investment opportunity,” said Jim Fetgatter, chief executive of AFIRE. “The cargo coming into the Port of Los Angeles represents 43 percent of all cargo coming into the United States. Respondents also say online 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.”
In 2010, industrial real estate was lowest-ranked among leading property types. This year, and every year since 2013, it has ranked first, except for 2014, when it was second-ranked. This year, retail property fell into fifth place; multifamily and office remained in second and third places, respectively, and hotels, long in fifth place, moved into fourth.
With 58 percent of respondents’ votes, the U.S. remains the country considered the most stable for real estate investment. Germany again took second place with 20 percent of the votes, and Canada remained in third place with 12 percent. The United Kingdom moved into fourth from fifth, while Australia fell from fourth to fifth. Eighty-six percent of respondents say they plan to maintain or increase their investment in U.S. real estate in 2018.
The United States also continues to lead the world in terms of offering the best opportunity for capital appreciation, followed by Brazil, remaining in second place. China and Spain both moved up from a sixth-place tie last year, taking third and fourth places, respectively. The United Kingdom fell from third to fifth place.
Top Five U.S. Cities
| City |
2018 |
2017 |
| Los Angeles |
1 |
2 |
| New York |
1 |
1 |
| Seattle |
3 |
4 |
| Washington, D.C. |
4 |
6 |
| San Francisco |
5 |
5 |
Ranking of U.S. Properties
| City |
2018 |
2017 |
| Industrial |
1 |
1 |
| Multifamily |
2 |
2 |
| Office |
3 |
3 |
| Hotel |
4 |
5 |
| Retail |
5 |
4 |
Top Five Global Cities
| City |
2018 |
2017 |
| London |
1 |
3 |
| New York |
2 |
1 |
| Berlin |
3 |
2 |
| Los Angeles |
4 |
4 |
| Frankfurt |
5 |
13 |
Most Stable and Secure Countries for Real Estate Investment
| Country |
2018 |
2017 |
| United States |
1 |
1 |
| Germany |
2 |
2 |
| Canada |
3 |
3 |
| United Kingdom |
4 |
5 |
| Australia |
5 |
4 |
Countries Providing the Best Opportunity for Capital Appreciation
| Country |
2018 |
2017 |
| United States |
1 |
1 |
| Brazil |
2 |
2 |
| China |
3 |
6 |
| Spain |
4 |
6 |
| United Kingdom |
5 |
3 |
Top Emerging Countries
| Country |
2018 |
2017 |
| Brazil |
1 |
3 |
| China |
2 |
1 |
| India |
3 |
4 |
| Mexico |
4 |
2 |
| Columbia |
5 |
9 |
Another study names London as a top European market for real estate investment. The top three European cities for real estate investment remain unchanged year-on-year, with London benefitting from three times the investment volumes of either Paris or Berlin which are firmly second and third, according to Colliers International’s Capital Flows: Developing Not Cooling report.
