Britain's departure from the European Union is scheduled to take place on 3/31/19. There's been a lot of speculation on just what it will mean for U.S. Commercial Real Estate.
The U.S. has long been attractive to domestic and foreign investors because of its stable economy (Great Recession notwithstanding), financial transparency, low interest rates, strong rule of law, and vast inventories across all property types.
In a survey conducted by AFIRE (Association of Foreign Investors in Real Estate) of its membership in Q4 2016, the leading global investment markets were New York, Berlin, London, Los Angeles, and San Francisco. London had either been number one or two for the previous five years, which shows that the uncertainty of Brexit has changed investor’s perception of not only London but of the UK as well, which fell to fifth place.
This technically means that landlords in the U.S. will be on the receiving end of the capital displaced by the exit. The membership cited New York, Los Angeles, Boston, Seattle, and San Francisco as the most desirable markets. They also mentioned several secondary markets as having good investment opportunities: Nashville, Portland, Charlotte, San Antonio, Madison, and Pittsburgh. The members also pointed out that the opportunities in the U.S. were across all investment strategies including core, opportunistic, and value add.
All the respondents were not wildly enthusiastic, however – 33% said that they had become more pessimistic about investing in the U.S. We will have to wait until the results from this year’s survey are available next January to see if the Brexit process this year changes foreign investors outlook.
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