Foreign Capital Continues to Flood into L.A.

LOS ANGELES—Over the last five years, foreign investors have invested more than $9.7 billion in Los Angeles office properties, with the funds concentrated downtown and on the Westside, according to research from JLL. The capital has been flooding in from Asia as well as Canada, Europe and the Middle East. This year, experts don't expect the demand from abroad to wan as the US economy strengthens and opportunities remain available.

“This capital is attracted to the strong and diversified US Economy,” Tom Bohlinger, EVP at JLL, tells GlobeSt.com. “L.A. is a top gateway market that benefits from very strong drivers in tech and entertainment, and yet is also extremely well diversified. Los Angeles is still in the expansion phase with room to run, and values are very attractive in relationship to other gateway markets. In fact, in 2016, Los Angeles saw a 60% increase in international capital making it the 4th largest recipient of cross boarder investment in the world.”

Canada actually invested the majority in Los Angeles real estate over the five-year span, spending $3.4 million on office properties. Hong Kong came in second with $2.4 million, followed by Qatar and Germany. These investors are seeking out specific markets. While investments were made throughout the Los Angeles market, $5.3 million went to Westside deals, while $3 million went to the Downtown Los Angeles market.

Bohlinger says that these investors are seeking diversity and capital preservation. Canada is driven to the market by consolidation of pension funds and positive FIRPTA changes, while Asia, primarily Hong Kong, is driven by the diversification and the security of the US economy and strength of the dollar. We expect China to remain one of the largest mover of capital for years to come,” he says. “Europe, primarily Germany driven by diversification, the strength of the dollar and the security of Gateway Cities, and the Middle East is also showing increased interest in the US for diversification out of Europe and yield.”

This activity is expected to continue through 2017. “We see continuing interest from Canada, the Middle East, Asia and Europe as they execute their mandates for diversification and investing in strong economies,” says Bohlinger. “This trend should continue if the product is available.”

LOS ANGELES—Over the last five years, foreign investors have invested more than $9.7 billion in Los Angeles office properties, with the funds concentrated downtown and on the Westside, according to research from JLL. The capital has been flooding in from Asia as well as Canada, Europe and the Middle East. This year, experts don't expect the demand from abroad to wan as the US economy strengthens and opportunities remain available.

“This capital is attracted to the strong and diversified US Economy,” Tom Bohlinger, EVP at JLL, tells GlobeSt.com. “L.A. is a top gateway market that benefits from very strong drivers in tech and entertainment, and yet is also extremely well diversified. Los Angeles is still in the expansion phase with room to run, and values are very attractive in relationship to other gateway markets. In fact, in 2016, Los Angeles saw a 60% increase in international capital making it the 4th largest recipient of cross boarder investment in the world.”

Canada actually invested the majority in Los Angeles real estate over the five-year span, spending $3.4 million on office properties. Hong Kong came in second with $2.4 million, followed by Qatar and Germany. These investors are seeking out specific markets. While investments were made throughout the Los Angeles market, $5.3 million went to Westside deals, while $3 million went to the Downtown Los Angeles market.

Bohlinger says that these investors are seeking diversity and capital preservation. Canada is driven to the market by consolidation of pension funds and positive FIRPTA changes, while Asia, primarily Hong Kong, is driven by the diversification and the security of the US economy and strength of the dollar. We expect China to remain one of the largest mover of capital for years to come,” he says. “Europe, primarily Germany driven by diversification, the strength of the dollar and the security of Gateway Cities, and the Middle East is also showing increased interest in the US for diversification out of Europe and yield.”

This activity is expected to continue through 2017. “We see continuing interest from Canada, the Middle East, Asia and Europe as they execute their mandates for diversification and investing in strong economies,” says Bohlinger. “This trend should continue if the product is available.”