London Edges Out New York as Top City for Foreign Real Estate Investment

New York slipped from its perch as the number one global city for foreign investors–displaced by London–reported the Association of Foreign Real Estate Investors, Washington, D.C.

In the U.S., Los Angeles tied New York as top U.S. city for foreign investment. New York has been the top U.S. city for foreign investment for the past seven years.

AFIRE CEO Jim Fetgatter said growing e-commerce boosted Los Angeles’ status. “With the growth of online shopping, foreign investors continue to rank industrial/logistics properties their number-one investment opportunity,” he said, noting cargo arriving at the Port of Los Angeles represents 43 percent of all cargo coming into the United States.

Foreign investors said online shopping will likely have the biggest effect on real estate over the next five years, Fetgatter said. “With these as benchmarks, it’s easy to see why investors would be bullish on Los Angeles.”

Industrial real estate ranked lowest among property types as recently as 2000, AFIRE said. But it has ranked first among foreign investors every year since 2013 except for 2014, when it slipped to second. Retail property fell to fifth place, while multifamily and office remained in second and third places respectively, and hotels moved into fourth place.

San Francisco–which has been on investors’ top five global cities list since 2011–fell to 11th place, and Washington, D.C. continued its slide among global cities, falling from 15th place last year to 25th this year, AFIRE said. Other top-ranked U.S. cities include Seattle and Houston.

Nearly 60 percent of foreign investors consider the U.S. the most stable country for real estate investment, AFIRE said. Germany again took second place with 20 percent of the votes while Canada remained in third place with 12 percent.

The U.S. also continues to lead the world in capital appreciation opportunities, AFIRE said, followed by Brazil, which remained in second place.

AFIRE called international investors “cautious” and said many expressed concern about where the industry stands in the typical real estate cycle. “They cited concerns about interest rate risks, high valuations, the impact of emerging technologies on retail and other property sectors, oversupply in some markets and property types and possible economic and political missteps that could affect real estate by triggering an economic slowdown or disruption in the financial markets,” the report said.