NEW YORK CITY-Those seeking foreign capital may soon be in luck, according to Brookfield Financial. The firm is reporting that—despite a recent dip in foreign capital infusion into the New York real estate market—the declining trend should turn around by year-end because, “interest from investors across the globe remains high,” according to the newly released Brookfield Financial “Second Quarter I.Q. Office Market Observations” report.
Foreign capital has accounted for almost $11 billion of investment in Manhattan office real estate since the beginning of 2012, the report states. However as of the end the second quarter of this year, investments have decreased more than 26% year-over-year based on a four quarter rolling volume, according to data from Real Capital Analytics.
This could give investors pause, but Brookfield says it has received “on-the ground feedback from the collaborative Brookfield Financial partner offices worldwide—which includes locations in Canada, UK, Germany, Australia, Brazil, India and China,” which shows strong demand for New York commercial real estate from international investors. As a result, Brookfield believes the recent slide will change course and veer upwards during the last six months of the year.
“Many foreign groups, including sovereign wealth funds, pension funds and insurance companies are looking to increase their share of assets invested in real estate, both at home and abroad,” Eric Anton, managing partner of Brookfield Financial, tells GlobeSt.com. “Many Asian countries are also pushing to diversify their real estate investments which have been heavily weighted at home.”
More specifically, he adds, “Based on first-hand conversations with the numerous foreign investors that the Brookfield offices have direct access to, overseas demand for Manhattan real estate remains as strong as ever, especially from Canadian pension funds, Asian institutions, and Brazilian high net worth individuals. It's clear to us that investors abroad still see the value of Manhattan real estate and remain particularly enamored with the office and retail sectors.”
A changing trend in Canada also suggests that investment stemming from the US' neighbor-to-the-north is likely to increase, says Anton. “Many groups, primarily in Canada, that were not knows to do direct investments, but invested through funds—are now contemplating direct investments. This indicates more comfort via investing in New York.”
Some foreign investors are even warming to the multifamily sector, the study notes. Brookfield Financial was recently commissioned by a major Asian investor to deliver a detailed study on the status of the New York City multifamily market for future investment consideration.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
