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As US Recovers, California Replaces London as Property Safe Haven

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real estate  United States  California  National Association of Realtors  US Distressed Property  NAR  New York  Los Angeles  David Parnes  Simon Lyons  Atlanta  Enstar Capital  Bond Street Partners  West Coast  TCW 

As US Recovers, California Replaces London as Property Safe Haven

By - Monday 18 June 2012

UK based and international resellers of property in places like California and Atlanta have been saying for some time that real estate in such locations is one of the few safe investments currently available on the global market, with rental yields well above savings interest rates and capital appreciation a near-certainty. But now the bigger players are confirming their accounts.

Simon Lyons, managing director of global property group Enstar Capital told Reuters: "It is now London and Los Angeles, not Shanghai or Moscow that interests the cash-rich international investor", Lyons also told of his regular trips to the US in search of bargains. The consensus is that the same wealthy European and Asian investors who have sent London property prices soaring because it was viewed as a safe haven, are now pursuing California and other such prime American locations as such safe-havens as London is now at greater risk from the potential collapse of the Euro.

Data released this week by the National Association of Realtors showed that international sales reached $82.4 billion (53.0 billion pounds) in the year to March 31, up from $66.4 billion in 2011. The report also showed Chinese buyers are now the second biggest buyers of American property accounting for 11% of sales in Q1 up from 9% in Q1 2011. The report confirmed that we are primarily looking at wealthy buyers as 62% of sales were cash purchases, and the average price paid by international buyers was $400k; well above the national average of $212,000.

To capitalise on increasing confidence, Los Angeles-based asset manager TCW has announced plans for a new $250 million fund enabling wealthy investors to buy foreclosed homes from government agencies and lenders.

David Parnes, a director at Bond Street Partners, a Los Angeles-based realtor specialising in high-end luxury and investment property, said that Los Angeles is enjoying its biggest influx of foreign capital for years.

"Investors are now snapping up foreclosures in greater numbers because comparatively low property prices mean they are able to achieve strong returns," he said. "Prices in L.A. are showing to 60 to 70 percent discounts against their equivalent in Manhattan."

Parnes points out many reasons to explain why the world's super-rich are making a beeline for California. The state is the financial hub of the U.S. West Coast, with Los Angeles already home to the highest number of foreign-born billionaires and Fortune 500 company CEOs outside New York.

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