LA and NYC: Top Cities for Foreign Real Estate Investors

foreign real estate investors

For years, New York City was the go-to spot for foreign real estate investors. However, as of 2017, Los Angeles had as much investment as the Big Apple, ending its seven-year streak. Let’s see why this happened and what it means to residents on the Westside.

Why Los Angeles?

During the 2017 annual survey of the Association of Foreign Investors in Real Estate (AFIRE), Los Angeles tied with New York City, moving the West Coast into contention with what used to be the powerhouse on the East Coast. Three years ago, LA was in fifth position. In 2016, LA was in second place. This year, LA closed the gap.

The top five cities were:

  1. Los Angeles
  2. New York City
  3. Seattle
  4. Washington, DC
  5. San Francisco

AFIRE suggests that one reason Los Angeles was attractive to real estate investors was both warehouse and industrial properties. As online shopping continues to grow, foreign capital is constantly looking for industrial and logistics properties. In addition to industrial properties, foreign investors are also looking for office, retail, and multifamily homes.

LA Ranks Globally As Well

In general, the entire United States ranked well according to AFIRE. They state that the US is the most:

  • Stable
  • Secure
  • Likely to achieve capital appreciation

Despite this rating, London pushed NYC out of the top spot and became the top global city, going from #3 to #1. The top five global cities are:

  • London
  • New York City
  • Berlin – showing that investors are no longer as worried about Brexit
  • Los Angeles
  • Frankfurt – jumping up from 13th place in 2016

New York Is Falling – LA is Not

New York City appears to be headed in the wrong direction. Real Capital Analytics tracks active commercial markets around the world. Of these thirty, only Paris, Denver, and NYC had substantial transaction volume drops. In NYC, the volume in the first half of 2017 dropped by 40%.

On the other hand, Los Angeles remained steady. Like London, LA’s transaction volume was close to that of 2016.

What Foreign Real Estate Investors Mean For the Westside

Some people assume that foreign real estate investment leads to higher real estate prices that price locals out of the market. Others worry that foreign investors don’t contribute to the local economies. However, this is not true.

The influx of foreign capital in the LA area will drive new construction and increase the economy in the area. Without foreign investment, many of the larger commercial building projects would not be happening in the area. Additionally, foreign real estate investors tend to look at only the ultra-high-end builds, not affecting the prices of average homes and properties.

As new ventures come into the area, the Westside will see increased business and financial opportunities. This will lead to a stronger economy, thus increasing the price of single-family homes in the area.

If you’d like more information about foreign investors in the area or how they will affect your own home buying or selling experience, give me a call. I’d be happy to talk with you.

© 2021 The Raskin Group. 2115 Main Street Santa Monica CA 90405 (310) 867-0173    DRE# 01912796

 

Compass is a real estate broker licensed by the State of California and abides by Equal Housing Opportunity laws. License Number 01991628. All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale or withdrawal without notice. No statement is made as to accuracy of any description. All measurements and square footages are approximate. This is not intended to solicit property already listed. Nothing herein shall be construed as legal, accounting or other professional advice outside the realm of real estate brokerage.

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