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Los Angeles has long been home to the country’s most coveted real estate. According to an article by The L.A. Times, however, the city is now ranked number one among global investors as well. Due to L.A.’s abundance of office space, rising property values, and relatively low real estate prices, international businesses are zeroing in on L.A. as the new city to grow their investments.
L.A. Attracting International Real Estate Investors for Its Business Districts
In addition to the city’s gorgeous waterfront properties and historic architecture, global investors are flocking to L.A. for its reputation as an international business center. Los Angeles’s proximity to major coastal ports and warehouses make it an ideal location for manufacturing, while being home to the world’s entertainment capital in Hollywood. Although shopping centers and residential properties continue to be popular investment choices in Los Angeles, the city’s landscape is quickly changing.
1) Los Angeles Has Plenty of Office Spaces
For international real estate investors, office spaces are the new favorite real estate category. However, the piqued interest in office buildings is not limited to downtown; West L.A. has also become the scene of its own burgeoning business districts. With the recent $1.34-billion purchase of four Westwood office buildings, $511-million purchase of Santa Monica’s Colorado Center office complexes, and the $429-million purchase of two Playa Vista office buildings, it’s no wonder that international investors are flocking to L.A. The city’s large population of highly-educated professionals make it one of the most lucrative areas of the country to establish a business–and global investors have noticed.
2) Property Values in Los Angeles Are Still Rising
When interest rates rise, home prices almost always decrease as sellers lower asking prices in an effort to entice buyers. However, before home prices dip, prices usually increase until they reach a head. This is where we are today, according the L.A. Times: The L.A. market is approaching the peak of ascent before prices decrease. This is precisely why international investors from countries like China and Canada are eager to grow their money in Los Angeles, reports Lew Horne, president of Southern California and Hawaii for CBRE Group Inc. Investors are looking to buy property in L.A., develop it, and sell for the maximum amount right before market prices begin to drop.
3) Compared to International Standards, L.A. Property Prices Are Still a Bargain
According to CBRE broker, Todd Tydlaska, 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.” Cost of living calculators, like the one offered by CNN Money, report that housing in New York is 39% more than L.A., while housing in the Bay Area is a whopping 51% more. Investments in L.A., however, are predicted to grow exponentially in once-neglected areas like L.A.’s Arts District and Historic Core; Rent in these areas is still much lower than that of San Francisco or New York.
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