Target Boston: City remains a top destination for international capital

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Petz_Frank_Color_Casual_HiResFrom Frank Petz
Managing Director, Capital Markets

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Boston unquestionably remains among the world’s top investment targets, driven largely by cross-border capital. In fact, foreign ownership in Class A properties in Boston’s CBD has risen dramatically in the last ten years, from just 1.8% in 2007 to 19.1% in 2016.

JLL Capital Markets Target Boston breakfast held at the UMass Club.

JLL Capital Markets Target Boston breakfast held at the UMass Club.

Given this trend, we recently invited four global investors to join us for a panel discussion led by JLL’s Lucy Fletcher, Managing Director of Capital Markets, and Gilda Perez-Alvarado, Managing Director of Hotels and Hospitality. Our esteemed panelists included:  Tinchuck Ng, International Chair, Cottonwood Management; Christian Göbel, Executive Vice President, GLL Real Estate Partners; Brian Antonellis, Director, Independencia Asset Management; and Andrew Osborne, Senior Vice President, Brookfield Global Real Estate.

CMG chart

Top 10 investment cities in the world in Q1 2016.

As Lucy shared during the discussion, Boston ranked among the top 10 investment cities in the world in the first quarter of 2016, with $1.9 billion of capital flowing in.

Yet, when asked how they stay competitive in such a hot market, the panelists views of Boston differed slightly.

According to Christian Göbel, who works for a Germany-based real estate investment group, the current pricing in Boston presents some challenges. “Despite an adjustment in expectation on returns, it remains difficult to justify buying in markets like Boston, New York, and San Francisco, unless you come with core plus capital,” he said. While he added that his company, GLL, has tried to buy in Boston but has been outbid, he “sees more attractive yields in other markets like Washington and Chicago.”

Several of the other panelists though expressed a different sentiment. Brian Antonellis said he really likes the dynamics in Boston, adding, “the market has a lot of things really going for it.” Tinchuck Ng, meanwhile, touched on a meaningful shift in the city that’s adding to its appeal, saying, “There’s more of an international presence in general here like we’re used to seeing in New York and San Francisco. When you get fundamental changes like that, it’s good to be here.”

For more information on the Boston investment market, don’t hesitate to contact me.

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