(Reuters) – U.S. investors became major buyers of European commercial real estate in the first half of 2012, after years of being crowded out of that market, Real Capital Analytics reported on Wednesday.
The UK, Germany and France were the number one, two and three targets for cross border investment, with the United States a major source of that money during the first half of the year, according to the research firm’s Global Capital Trends mid-year review.
“The local players are struggling or are scared,” said Dan Fasulo, Real Capital Analytics managing director.
Blackstone Group LP (BX.N), Cerberus Capital Management LP CBS.UL and other U.S. private equity firms have been actively seeking or investing in those countries, along with real estate management firms, such as Tishman Speyer.
The amount of money invested in commercial real estate globally inched up in the second quarter from the prior three months to $157.0 billion, with apartment building sales accounting for much of that.
But first-half investment was 23 percent lower than a year ago, reflecting a global slowdown in commercial real estate investment, the report said.
Meanwhile, the U.S. market was viewed as a safe haven, attracting investment capital from the Mideast Gulf nations, Japan, Korea, The Netherlands China and Israel.
In the first half of the year, global commercial real estate sales fell 23 percent to $306.3 billion. That’s roughly $100 billion lower than either the first or second halves of 2011, the report said.
Within the major categories of commercial real estate, only apartments posted an increase in total sales in the first half of 2012, rising 22 percent from the first half of 2011.
Of the top five destinations of investment by markets and property type in the first half of the year, four were office markets where investment fell from a year ago. The London-metro office market was the top target investment market with $9.51 billion invested in the first half of the year, down 5 percent from a year earlier.
The Tokyo office market was No. 2 at $6.22 billion, down 19 percent. The New York metro area office market was No. 3, with sales at $5.85 billion, down 21 percent. The Paris office market was No. 4, with sales at $5.19 percent, down 7 percent.
But at No. 5, the New York metro apartment market in the first half of the year captured $4.29 billion in investment, up 75 percent.
Low initial yields on top-quality buildings pushed some investors to less-than-trophy type buildings, out of major cities or to other types of real estate, the report said. Investing in shopping centers or malls staged a comeback, especially in Tokyo and Paris, the report said.
The number of secondary U.S. markets, such as the apartment markets in Dallas and Phoenix, the Denver and Seattle office markets or the Chicago retail market made the top 50 target markets. Meanwhile, property types in Moscow, Rome, or Warsaw did not.