When it comes to foreign investments in commercial real estate, Los Angeles is coming up.
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Just four years ago, the Association of Foreign Investors in Real Estate, ranked Los Angeles fifth among the top U.S. cities for foreign real estate investments.
Last year, Los Angeles tied New York for the top U.S. spot, according to an annual survey by the University of Wisconsin on behalf of the AFIRE.
Bisnow spoke with Allen Matkins Real Estate partner Keith Pollock about the state of foreign investment in the Los Angeles and Orange County area, who these foreigners are and why foreign investors are bullish on the region.
Bisnow: Tell us about the state of foreign investment in the Los Angeles and Orange County area. Where are foreigners investing their money? What CRE sectors are they investing in? Where are these foreign investors coming from?
Pollock: Foreign capital investment continues to focus on the Los Angeles and Orange County office markets, with a recent focus on the industrial sector — mainly to take advantage of the robust e-commerce trends.
I have read that foreign investors and developers have invested more than $8B into the Los Angeles commercial real estate market over the past two years. The capital is mainly coming from China, Canada, the Middle East and Europe. Despite the recent pullback we have seen with Chinese investing overseas, the United States (and Los Angeles in particular) remain a primary market for new foreign investment — mainly because of healthy fundamentals.
Bisnow: Why is the Southern California region an attractive area for foreign investment? What is driving foreign investment into the area?
Pollock: Foreign investors are attracted to Southern California for a number of reasons, some of which include: healthy commercial real estate fundamentals, limited new supply over the next several years relative to other real estate markets (like Washington, D.C., and New York City), excellent demographics (such as a strong population density, steady population growth and rising household income) and a rising demand for space.
For example, the growth of media and content companies in Los Angeles is providing further demand (especially in the Arts District).
Bisnow: What is the future of foreign investments in the region? Are we going to see more or less in the next three to five years?
Pollock: I believe that the future remains bright over the next three to five years. However, investors should remain cautiously optimistic based on the recent headlines of today — EB-5 financing, stock market volatility, potential new immigration restrictions and rising interest rates.
Hear more from Pollock and other capital markets experts at our Los Angeles Capital Markets and Foreign Investment event Feb. 28 at JW Marriott LA Live.
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