The US has overtaken Europe as the favored destination for real estate investment, according to a survey.
The US is expected to attract the largest percentage – 41 percent – of investor capital designated for real estate this year, compared with 36 percent for Europe, according to the 2017 Investment Intentions Survey published annually by the Pension Real Estate Association, the European Association for Investors in Non-Listed Real Estate Vehicles and the Asian Association for Investors in Non-Listed Real Estate Vehicles.
By contrast, investors planned to deploy 42 percent of total committed capital to Europe and 36 percent to the US in 2016.
Within the US, the most attractive cities for investment have shifted in the last year. New York claimed the top spot in the 2016 survey, but in 2017, Los Angeles and San Francisco are challenging the Big Apple in a three-way tie for first. Los Angeles moved up from fifth place last year, while San Francisco was 2016’s third-place finisher.
“US investors are reaching for a little bit of yield,” said Greg Mackinnon, director of research at PREA. “As everyone knows, New York has been expensive for a number of years.”
However, domestic and ex-US investors have significantly different plans for capital deployment in the US this year, with non-US investors focusing on large, primary markets and local investors showing significant interest outside the largest markets.
Investors also shuffled their preferred property types in the US, picking multifamily as the most popular sector for new investment this year, followed by office and industrial. Last year, office took the top slot, with apartments in second place.