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Overseas Investors Flocked to Real Estate in Q2

As global investor activity picked up in the second quarter, a number of U.S. cities saw more than half a billion dollars each in foreign real estate investment.


""Jones Lang LaSalle"":http://www.us.am.joneslanglasalle.com/unitedstates/en-us/Pages/Home.aspx revealed in its most recent Global Capital Flows Report that global transactional volumes rose to $108 billion in Q2 2012, up 24 percent from a worrying dip in activity in Q1. The Americas posted the most activity, contributing $47 billion to the second quarter's overall total.

While the increase in transactional volumes was heralded as a positive sign in the face of global economic uncertainty, activity levels in Q2 still fell 1 percent from the same period in 2011, and the first half of 2012 showed a 7 percent drop from the same time last year.

Jones Lang LaSalle predicted that rising prices in core locations may create investment opportunities in secondary markets, providing a boost in activity to the year's second half. Based on this, the company retained its $400 billion full-year volumes forecast.


The United States showed quarter-over-quarter and year-over-year gains, working its way up closer to the $40 billion transactions mark. Approximately 35 percent of its deals involved cross-border parties.

Meanwhile, New York, San Francisco, and Washington, D.C. (in that order) continued to top the list of U.S. cities most targeted by foreign investors.

The list of the top 10 U.S. markets most involved in cross-border purchases also includes several newcomers, including Miami, Minneapolis, and Phoenix.

""Core U.S. real estate throughout primary and many secondary cities remained very attractive to both domestic and foreign investors, based on absolute initial yields on offer, and their spread over record-low Treasury rates,"" said Josh Gelormini, VP of Americas Research, Jones Lang LaSalle. ""The U.S. is also benefitting from a safe haven strategy, as other global markets appear on shakier ground, particularly given the ongoing Eurozone crisis.""

In addition, New York, Chicago, San Francisco, and Los Angeles made the list of the top 10 most active global cities, with New York reaching third place and Los Angeles, Chicago, and San Francisco (in that order) rounding out the bottom three spots.

A release from Jones Lang LaSalle pointed out that demand in U.S. real estate is likely increasing because it is the safest bet in the current global economy.

""Although U.S. growth appears relatively weak, compared with most other fully mature economies, growth is stronger, and investment into real, tangible assets in the country is attractive as a defensive strategy in volatile, challenging economic and market conditions in developed and emerging countries alike,"" said the company.


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