MIPIM: Global capital turns back to US market, says JLL

The flow of global capital is headed back into US real estate as foreign investors seek to add prime domestic real estate to their ownership portfolios, according to new research issued by JLL. In 2010, inter-regional investment volumes in the Americas doubled between 2009 and 2010 from $14 bn in 2009 to $31 bn in 2010.

This strong bounce back was not only driven by the domestic market, but was led by inter-regional activity, as foreign investors and purchasers took advantage of a pick-up in activity in the core US markets to trade. Inter-regional purchasers transacted $5.6 bn in 2009 and $13.37 bn in 2010.

Investor interest is coming from overseas funds, life companies and private equity which is creating competition for limited supply and causing investor interest to expand from the primary New York and Washington, D.C. marketplaces and into secondary and tertiary market locations.

'While most foreign investors sought comfort in the best performing US markets such as New York and D.C., interest has begun to extend to the five major US markets, and within 12 months, they will be interested in eight to 10 others throughout the country,' said Steve Collins, managing director for JLL's International Capital Group. 'We talk to international investors every day and while most of them have also begun to target Boston, Los Angeles, San Francisco and Chicago, we think that by the end of the year, Seattle, San Diego, Atlanta and Houston will be added to the mix for strategic purchases.'

'Last year foreign purchasers took advantage of a pick-up in activity in the core markets to trade effectively. The top US capital sources included global funds, followed by Israel, Germany, Canada and South Korea. The life companies and open-ended funds are looking for transparent and safe places to park their money and commercial real estate is looking stronger every day,' added Collins.