Bloomberg News

New York Beats London as Top Spot for Real-Estate Investment

October 05, 2011

(Adds Real Capital Analytics comment in sixth paragraph.)

Oct. 5 (Bloomberg) -- New York overtook London as the No. 1 destination for real-estate investment for the first time since 2007 after improved access to financing spurred more U.S. deals, Cushman & Wakefield Inc. said in a report today.

Investments grew 166 percent to $29.7 billion in the New York area in the 12 months through August, compared with a year earlier. Investment in greater London increased 2.4 percent to $27.2 billion, according to the report based on data compiled by the New York-based broker and Real Capital Analytics Inc.

Buyers are drawn to cities like New York and London because of a greater focus on the “biggest and best,” Cushman said in the report. The trend will continue in the next six months, it said.

Outside of the U.S. real estate lending tends to be tighter and is still “very focused on prime, leased assets only,” Cushman said in the report.

Chicago, New York, Boston and Atlanta made up four of the five fastest growing property investment markets by volume, the report said. Frankfurt and Germany’s Rhine-Main area ranked fourth, with growth of 126 percent.

A resurgence of the commercial mortgage-backed security market in the U.S. in the first half of this year spurred the increase in investment, said Josephy Kelly, director of market analysis at Real Capital Analytics. That market is now “starting to slow down,” he said.

Distressed Debt

Distressed debt is a much greater concern in Europe than the U.S. and that’s holding back new funding in the market, particularly for second-tier assets, Kelly said. Figures on the level of distressed debt in Europe aren’t available because much of it is privately held, he said.

Tokyo’s investment market fell to the third spot from second following the earthquake and tsunami earlier this year. Investment dropped 12.6 percent to $18.1 billion.

London kept its spot as the top city for overseas property investment with $14.2 billion. That was a drop of 9.6 percent. One in every two dollars spent on real estate investment in London during the period came from abroad. Kelly said there has been a “resurgence” in interest in London from U.S. investors

London was followed by Paris, New York, Singapore and Beijing as the favorite destinations for overseas buyers.

--With assistance from Simon Packard in London. Editors: Jeff St.Onge, Ross Larsen.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net

To contact the editor responsible for this story: Ross Larsen in London at rlarsen2@bloomberg.net


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