New York attracted the most overseas capital in 2016 followed by London
Momentum cities Bangkok, Bangalore and Sydney are now increasingly finding international capital looking their way, says a Knight Frank report
New York attracted the most overseas capital in 2016 (USD 16.3 billion) followed by London (USD 15.9 billion). In Europe, Paris and Berlin attracted overseas capital totalling USD 9.7 billion and USD 6.8 billion respectively, says Knight Frank’s Active Capital report.
Knight Frank’s Super Cities has been dominating real estate investment to date, however momentum cities such as Bangkok, Bengaluru and Sydney are now increasingly finding international capital looking their way, it says.
The main Indian cities are also seeing increasing interest from global investors and commercial developers driven by improving occupier markets. The recent liberalisation of several provisions of Indian REIT regulations means that we could see the first listings soon; a development that would greatly augment transparency and governance in the country, says the report.
"In China, we expect robust domestic investor demand as capital controls keep some of the cash at home. In addition, we continue to see increasing interest in China from larger global investors attracted by the increasing liquidity and transparency of the real estate sector and economy with the core cities and sectors the primary beneficiary; although it remains too early for many," it says.
The globalisation of real estate will accelerate from 2018, with more than 30 percent of transactions likely to be cross-border, according to global real estate advisor Knight Frank.
New York attracted the most overseas capital in 2016, USD 16.3 billion, but remained largely driven by domestic buyers, who accounted for 60 percent of total investment. London is ranked second in terms of overseas investment, but the $15.9 of foreign capital represented 80 percent of total volumes, making it the Super City most driven by overseas capital.
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Elsewhere in Europe, Paris and Berlin attracted overseas capital totalling USD 9.7 billion and USD 6.8 billion, respectively. In Berlin, this constituted 69 percent of total investment activity, whereas in Paris domestic buyers are more active, accounting for 61 percent of total transactions, it says.
Knight Frank’s data evidences the rise of Asian investors, which accounted for USD 67 billion of overseas investment in 2016, versus USD 19 billion in 2007, which is recognised as the peak of the previous real estate cycle.
European investors, meanwhile, have not returned to the levels of overseas investment seen pre Global Financial Crisis. In 2007 European investors placed USD 118 billion overseas, which plummeted to a low of USD 22 billion in 2009, before recovering to USD 78 billion in 2015, and USD 64 billion last year. Similarly, UK investors are placing less capital overseas, accounting for USD 16 billion over overseas investment in 2016 versus a 2007 high of USD 61 billion, it says.