London topples New York to rank first among foreign investors in real estate

New York City took a double hit in an annual survey of real estate investors, which saw London overtake it in first place globally and Los Angeles tie it for top U.S. city.

The annual survey of the Association of Foreign Investors in Real Estate asks its members, who are estimated to have more than US$2 trillion in real estate assets under management, to rank markets by various measures, such as stability and opportunity for capital appreciation. This year’s poll, the 26th, also saw pricey San Francisco, which had been one of the top five global cities since 2011, fall to 11th place, and Washington, D.C., skid to 25th from 15th place last year, part of a long slide.

Foreign investors are less worried about the impact of Britain’s exit from the European Union than they were a year ago, association chairman Edward M. Casal said in a statement, referring to London’s jump from third to first place — although Britain did fall from third to fifth among countries offering the best opportunity for appreciation.

The U.S. was first for planned real estate investment in 2018, followed by the U.K., Germany, Canada and France. And New York is no slouch, as the chart shows.

“This was more of a dispersal of the votes and a broadening of the investors’ interests into other cities in the U.S.” than a reflection on New York, association chief executive Jim Fetgatter said in an email. Los Angeles, Frankfurt, Paris, Seattle and Shanghai, for example, all got more votes than last year. “This may be a sign of a general global optimism for business,” he said.

It was L.A.’s first time in the top spot for U.S. cities, while New York had been named the top U.S. city for the last seven years. Los Angeles can thank its mighty port for the honour. “With the growth of online shopping, foreign investors continue to rank industrial/logistics properties as their No. 1 investment opportunity,” Fetgatter said.

In an interview, he said that the recent U.S. tax overhaul is “not necessarily a boon” to real estate, preserving much of the status quo for the industry, but is generally a positive development. Investors will benefit from the far lower corporate tax rate, which will create jobs and increase income, he predicted.

The survey was conducted in the fourth quarter of last year by the James A. Graaskamp Center for Real Estate, at the Wisconsin School of Business.

SIMON DAWSON/BLOOMBERG London’s One Hyde Park. London’s jump from third to first place in a poll of real estate investors suggests foreign investors are less worried about the impact of Brexit than they were a year ago.