New York Falls to Third in Foreign Commercial Real Estate Buying
New York fell to the third-most popular city for overseas commercial real estate buyers in the second quarter, trailing London and Paris, as Europe’s debt crisis failed to deter purchasers, Jones Lang LaSalle Inc. said.
The U.K. capital topped the list, with foreign investment rising 32 percent to $8.67 billion in the three months through June, the broker said in a presentation today. Foreign buyers spent $4.7 billion in Paris, about 50 percent more than a year ago. New York, which topped the ranking a year ago, had a 43 percent drop to $4.34 billion.
London “is the most liquid market in the world,” Robert Stassen, a research director at Chicago-based Jones Lang, said on a call with reporters.
The Shard, western Europe’s tallest building at 1,016 feet (310 meters), was inaugurated in London July 5 and is among five new skyscraper projects that will add about 3.8 million square feet (350,000 square meters) of prime space within a mile of the Bank of England. Central London’s office vacancy rate fell to 5.4 percent from 5.8 percent through the first quarter of this year, according to Jones Lang.
“For the first time, with the global capital coming into Europe, we actually see premiums for lot size” in London, Stassen said. “The larger the lot size, the more money that’s chasing it.”
Investors spent about 50 billion euros ($62 billion) on European commercial real estate in the first half, 9 percent less than a year earlier. For the year, investment will fall 10 percent from the 119.7 billion euros last year, partly because of a stronger dollar, Jones Lang estimates. Investment globally may meet last year’s total of $400 billion, Jones Lang said in the presentation.
Overseas investors have been buying in Paris after tax rules that favored domestic investors expired, Stassen said. The amount of French buyers of income-producing buildings in their home country “has fallen dramatically” to 40 percent compared with as much as 70 percent last year, he said.
To contact the reporter on this story: Neil Callanan in London at firstname.lastname@example.org