independent

Wednesday 23 April 2014

US property developers shun Europe due to debt crisis

PROPERTY

EUROPE'S sovereign debt problems and looming recession have pushed most European countries -- except for a few, such as Switzerland and Poland -- off the map for US property investors, Reuters reported yesterday.

All European countries, except Switzerland, fell in the ranking of security and stability, according to the 20th annual survey of Association of Foreign Investors in Real Estate members.

A steep decline in votes for Germany moves Canada into second position and left Germany as the only European country in the top five.

Suspicion about European property will make it even harder for the National Asset Management Agency to sell off Irish commercial property this year as it tries to earn some sort of return for taxpayers and the Government.

The United States remains the top choice of most global commercial real-estate investors in 2012, but the country has lost ground to Brazil, which ranked second last year.

While the United States offers the most stable and secure option in commercial real estate, investors said improvement in rent and occupancy growth and the repeal of a 1980 foreign investment tax would have the strongest impact on their investment decisions.

For about the past year or so, investors in US commercial property have focused on cities such as New York, Washington, Boston, San Francisco and Los Angeles, driving prices up and yields down.

Hotspot

Meanwhile, commercial property in Brazil, with its bubbling economy and safer investment environment, has become a hot spot for global investors. Sao Paulo, Brazil's largest city, jumped to the fourth best city for property investment in 2012, up from 26th place last year.

Around 70pc of respondents picked the US, Brazil or China as their favourite property investment country, while the remaining 30pc had top choices from 13 other nations on five continents.

As for the top cities for foreign investment in 2012, New York remained at the top of the league table.

London moved up to second place from third, swapping ranks with Washington DC. Sao Paulo was fourth, and San Francisco moved up to fifth from tenth last year.

Irish Independent

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