WHY LA RANKED #1 AMONGST INTERNATIONAL REAL ESTATE INVESTORS
The Los Angeles area has claimed the “#1 area of interest” spot in North America this year, in a survey of global real estate investors, according to an article by the L.A. Times. Los Angeles has for a long time been home to some of the the country’s most sought after and coveted real estate. With property prices being relatively low overall as compared to other international real estate investment havens, paired with consistent increases in property values, increased business activity and an abundance of office space, it’s no wonder why LA seems to be catching the attention of international investors.
L.A. IS CAPTURING INTERNATIONAL REAL ESTATE INVESTORS’ ATTENTION FOR ITS BUSINESS HUBS
Los Angeles offers everything and anything somebody could be looking for in a city to call home. Actually, the city as a whole is made up of hundreds of individual enclaves that all boast cultures that define the areas as truly unique. From the hills to the beaches, the city blocks of downtown, to the startup culture of the Silicon Beach communities, Los Angeles is a melting pot of opportunity and eclecticism. Global investors see this and are moving in. Los Angeles’s close proximity to mega shipping ports and warehouses make it an idyllic location for production and manufacturing, all while being home to Hollywood, the entertainment capital of the world. While shopping centers and residential developments continue to capture most of investors’ interest, Los Angeles is promoting change in much more significant ways. Many districts are allowing for more flexible zoning laws, new measures are being proposed to extend nightlife hours, and the startup culture is booming.
1 | ABUNDANCE OF OFFICE SPACE
Office space is the new favorite real estate category for international investors. The increased interest in office space is not limited to just downtown; many of the beach cities of West L.A. over the past few years have experienced significant growth of startup activity, driven by the strong local economy and the Silicon Beach movement. Major companies such as Google and Snapchat have nailed stakes into the ground here, and with recent purchases of office buildings above the $1 Billion dollar threshold, it’s no wonder why investors looking for a slice of the pie are flocking to L.A. Many of these areas’ inhabitants are highly educated, specialists with a strong work ethic and diverse skillset - all of this contributes to making Los Angeles one of the most lucrative cities in the country to launch and achieve success in new businesses.
2 | PROPERTY VALUES IN LA ARE STILL ON THE RISE
Typically when interest rates rise, home prices will decrease - as sellers make it a point to lower asking prices over time in an effort to entice buyers. Before home prices decline however, prices usually continue increasing until they reach a level where high prices cannot be sustained because the market cannot bear it. This is where we are today. In 2017 we have experienced a number of increases in interest rates, and according to the L.A. Times: The L.A. market is approaching the peak of ascent before prices decrease. For this very reason, international investors from countries such as Canada and China are jumping to get in, develop and sell for the maximum amount right before the market begins to decline, according to Lew Horne, president of Southern California and Hawaii for the CBRE Group Inc.. in Los Angeles
3 | RELATIVE TO INTERNATIONAL CITIES, L.A. PROPERTY VALUES ARE STILL CONSIDERED A BARGAIN
Despite Los Angeles’s real estate being some of the most expensive in the world, real estate here is still cheaper than other cities on an international standard according to CBRE broker, Todd Tydlaska, who notes that L.A.’s property prices are still a bargain compared to other cities like San Francisco and New York. “Rents in other markets have really run up,” says Tydlaska. “L.A. was late to the recovery and still has room for rents to rise.” Housing costs in NYC for instance are 39% more than Los Angeles, while costs in the San Francisco market are a staggering 51% more expensive, according to CNN Money’s Cost of Living calculator. Investment into Los Angeles. Investments in L.A. Real Estate is predicted to grow exponentially in the previously neglected areas of L.A.’s Historic Core, Arts District, Mid Wilshire, East Side, and Valley; Rent in these areas is still only a fraction of that compared to SF and New York.
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