LONDON-The cross border real estate investment market reached its highest level in three years by the end of 2011, according to a recent Savills study. The company said the trend should continue, due to an ongoing build-up of equity from sovereign wealth, oil-rich regions and investors moving capital away from riskier markets.
Cross-border investment accounted for about $120 billion in 2011, about 22% of total global transaction activity, according to the report. This is a 50% increase from 2010, when cross-border accounted for about $61 billion.
The traditional targets continue to be the core markets of New York City ($33.8 billion), London ($29 billion), Tokyo ($22 billion), Washington, DC ($16.8 billion) and Paris ($16.4 billion). Los Angeles, San Francisco and Chicago are included in the top 10, showing that the US is still a safe haven for investment.
Arthur Milston, a managing director with Savills, tells GlobeSt.com that the US success has because of the country’s quick action on addressing bank system and bad debt problems. “Continental curope is only now beginning that process,” he says. “Spain, Italy and Portugal still pose problems, the UK has been marginalized by continental Europe, and France has significant economic issues as well. Investors from Russia, Asia and the Middle East want to park money somewhere safe in case geopolitical developments force those investors to abruptly leave their home countries. That’s why they like investing in America.”
He says though the recovery is slow in the US, the country seems to be ahead of the curve compared to Europe. “Further increases in oil prices would likely result from geopolitical turmoil in the Middle East, which would only enhance global perception of the US as a safe haven for investment,” Milston says. “If Spain were to suffer a crisis similar to the one in Greece, or if China were to go into recession, then investor sentiment would be affected globally, but those scenarios don’t seem likely right now."
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