JLL: US is the dominant destination for foreign capital

The US market remains the top destination for foreign real estate investment, according to an International Capital Sources report published today by Jones Lang LaSalle (JLL). US real estate attracted more than $38.7 billion in foreign investment in 2013, representing a 40 percent increase over 2012. Across all property types, Canadian, Chinese and Australian investors comprised the top three foreign sources of capital over the past year.

Allocating $11.86 billion across more than 458 properties, Canadian investors represented almost one-third of all foreign activity coming into the US in 2013. The investment total marked a significant increase from the $9.12 billion invested in 337 properties in 2012. Toronto-based Brookfield Asset Management was the top Canadian investor of year, investing $4 billion across 124 office, apartment and industrial properties primarily located in Dallas, Houston, Los Angeles and Washington DC. The Caisse de dépôt et placement du Québec was the second-most active Canadian investor, investing $1.64 billion in just four properties.

Chinese investors were the second largest source of capital, investing $3.12 billion across 31 properties. JLL noted that the “main impetus for the boom of China capital coming into the US has been a slowdown at home combined with the opportunity for nondomestic real estate investment for the first time, which began at the end of 2012.” This resulted in Chinese capital flowing into core assets in the gateway markets of New York, Los Angeles and San Francisco. JLL cited such deals as Zhang Xin’s $1.4 billion joint venture with Brazil’s Safra family for a 40 percent stake in the General Motors Building and Fosun International’s $725 million purchase of One Chase Manhattan Plaza.

Meanwhile, Australian investors allocated $2.68 billion to US real estate throughout the year, up from $1.04 billion in 2012. Queensland government-owned investment firm Queensland Investment Corporation generated the bulk of the investment activity, closing just under $1 billion in retail deals across California, Nevada, Virginia, West Virginia and Pennsylvania. JLL stated that it expects Australia to become “an even bigger player” over the next few years.

For 2014 and beyond, JLL expects investors from such countries as Singapore, South Korea and Norway to export capital to the US on “a large and increasing scale.” As foreign investors become more knowledgeable of the US’s economic recovery and more comfortable with risk, the US will continue to be a “safe haven” and the “destination of choice” for international capital, the report stated. JLL predicted that that targeted investments for the coming year will include high-quality office assets and residential development in prime and secondary markets.