NEW YORK CITY—I recently had the pleasure of attending the MIPIM International Real Estate Conference in Cannes, France. Over 20,000 professionals were in attendance, most hailing from Europe with Asian investors in a not so distant second.
Largely absent were the Americans. Besides the National Association of Realtors, the U.S. had a small presence. Only international investors such as Thor exhibited.
Meanwhile, countries and cities had huge displays promoting their real estate and infrastructure projects. Istanbul hosted the opening party, which drew thousands. Holland, Paris and London had large tents along the Riviera.
I could not find one U.S. city presenting. They should be. There is competition from other cities around the world. With the Euro now approaching par with the dollar, European investments are beginning to look very favorable.
In speaking with Cushman & Wakefield's European managing directors, they have seen many U.S. opportunistic buyers searching for yield in their countries. It seemed like only the Scandinavian countries, where real estate seems to trade amongst themselves, was not seeing U.S. interest.
What is most surprising is core returns seem uniform around the world in developed countries. For example, a stabilized asset in Brussels or China will bring a mid-5 cap. German cap rates dip into the 4s as buyers can obtain debt for 10 years at only 1.5%.
The U.S. must understand that we do compete in a global market. For years, we have portrayed ourselves as the safety deposit box of the world, but we must continue to present ourselves as welcoming. The FIRPTA tax remains a large impediment, causing many foreign buyers to buy minority stakes in U.S. properties.
At the conference, most buyers I spoke with said they have heard there is nothing to buy in New York City. They were shocked to learn that over 5,000 properties traded in 2014. I also tried to convey to most buyers who were looking for $50 million plus ticket prices to consider smaller price points, as there are over 20x the amount of sales in this range.
Although we may believe that global capital flows only one way to the U.S., we must continue to promote our value proposition, as it is apparent that U.S. and global capital is also finding homes elsewhere.
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James Nelson
James Nelson is a Principal and Head of Tri-State Investment Sales in Avison Young’s New York City office.
Since Nelson’s start in the real estate industry 19 years ago, he has played an integral role in the New York City real estate market. He leads a team of professionals in a variety of client service offerings, including asset disposition, asset recapitalization, market research and financial analysis. His proficiency and capability is unmatched in all aspects of the acquisition and disposition of investment-grade real estate, as well as development and redevelopment transactions, on behalf of both institutional and private capital clients across all property types.
Prior to joining Avison Young, Nelson most recently served as Vice Chairman of Cushman & Wakefield, where he ran a successful investment sales team that marketed over $1 billion in deals in New York City and throughout the country over the past two years alone. He was also ranked as the number one Investment Sales broker at the firm nationwide in 2016. Prior to joining Cushman & Wakefield, Nelson was a partner and top producer for Massey Knakal for six of their last eight years and was named the company’s youngest partner in 2004. While at Massey Knakal, James was involved in the sale of over 400 properties and loans with an aggregate value of over $3.8 billion.
