Do investors really prefer New York property over London property?
While for some time now London has been the centre of the worldwide real estate market attracting the attention of investors from all over the world it seems that things are changing. A report by the Association of Foreign Investors in Real Estate shows that 90% of those who responded are planning to either maintain or increase their US exposure during 2015. When you bear in mind that the US is the largest economy in the world this is perhaps no surprise that many will be a little shocked to see investors apparently switching from London to New York.
Stability and security
Interestingly while the US was voted the most stable and secure real estate market in the world the UK was beaten into third place by Germany. This is perhaps a little reminder for the UK real estate market that nothing goes up in a straight line and there will be times when investors will look elsewhere for greater value. It may well be that the UK authorities decision to reject the euro as its base currency has been rewarded because, as we all know, Germany is in effect the “European Union” and many policies are put in place to benefit the country first and foremost.
The UK still fares fairly well when investors were asked about expected capital appreciation during 2015 with the US voted number one, Spain in second place and the UK third. On the surface it may be a little disappointing to see the UK behind Spain but when you bear in mind the enormous fall in real estate prices across Spain over the last few years, at some point the sector is going to bounce. Whether ongoing issues concerning Greece and a possible withdrawal from the European Union impacts the Spanish market during 2015 remains to be seen.
Looking to the future
The US market fares very well on all counts across this real estate investment survey and it will come as no surprise to learn that the vast majority of capital invested in the US will come from China. China has been a significant investor in the worldwide real estate market for some time now using its political and financial strength to curry favour not only in North America but also Latin America.
We did see a period of repatriation when the Chinese real estate market wobbled in 2014 but the authorities seem to have this under control within a medium to long term plan now in place. It seems as though the home for international investment in the US is likely to be New York which was followed by San Francisco, Houston, Los Angeles and Washington as preferred US investment destinations.
Preferred international cities
As we touched on above, New York is the preferred real estate investment arena for 2015 with London in second place, San Francisco third followed by Tokyo and Madrid. When you bear in mind the significant increase in the cost of London property during the last few years it is perhaps surprising to see the city doing so well at this point in the worldwide real estate cycle. However, if you dig a little deeper you will see that the UK economy is fairly well grounded, interest rates are unlikely to rise significantly and a lack of premium properties for sale in London does offer some support for prices.