Properties

Real estate investments in the United States from Los Angeles to Portland

A rejuvenation of sorts will be underway in the US soon.

Jul 10, 2017 | By Willy Yeo

Los Angeles.

With Trump now in office and recently having renewed his commitments to make significant investments in infrastructure in the US, there are now new reasons to think that a rejuvenation of sorts will be underway in the country soon. One of the main industry beneficiaries will be real estate, with greater connectivity and hence more movement and economic development. In light of such trends, it is worthwhile for us to look at some of the bright spots in real estate investments in the US. Considering the sheer size of the market, perhaps a more feasible option would be to be highly selective in the cities addressed in this article. Thus, I will zero in on three cities in particular that currently present strong value propositions in their own ways.

Familiar to most, would be the real estate market in California, particularly Los Angeles (LA). Besides being the most populated city in the state, LA is also known to be a major driver of growth in the state’s capital markets. This is especially so among investors looking for alternatives to New York on the East Coast, which according to some analysts, has seen its real estate market recover more than LA, suggesting further upsides to be had in the City of Angels. Added to the fact that the subway system in the metro area continues to expand, and the narrative for growth becomes compelling, especially for projects close to new lines. As LA continues to evolve into a global technology hub, the knock-on effects of its role as home to the global entertainment industry are tremendous (though production tends to be moved to other sites, technology and content development, typically seen as higher value, are increasingly done locally).

Austin, Texas, South Congress Avenue View Capitol Building

What tends to be forgotten, especially after tanking oil prices, is the southern central region, notably Austin, Houston and the like. The former, also the capital of Texas, has long benefited from the diverse economic base of the region, thereby being relatively unscathed from the global financial crisis. Its growing and highly-educated population and unique X-factor that attracts hip millennial executives serve as driving forces for the local real estate market. Moreover, although national, regional and local real estate players compete within the market, there is also a level of cooperation, thereby keeping debt and equity levels healthy for further investment. The market has seen such growth that residents are now expressing concern about transport, costs of living and doing business, an issue that has seen developers respond with more mixed-use projects in order to bring compatible activities together.

Luxury home in Portland.

In the Northwest, Portland stands out, not just as Oregon’s largest city, but also as one that continues to show strong growth. Besides attracting new residents with its high standard of living, employers are enjoying relatively lower business costs and a well-trained workforce. In fact, the city has seen its professional, business and technical service industry driving the local economy out of the doldrums after the global financial crisis, with growth in these sectors outperforming national rates. This explains the high levels of activity amongst developers in providing projects meeting the housing demands of these professionals, as their incomes rise following rising needs for their skills as well. All of this sheds light on sharper price appreciation in the city than the national average rates, and builders have expressed difficulty in keeping up with demand. Nonetheless, rent relative to average income levels is still manageable, suggesting that there is more room yet for rental growth.

As mentioned earlier, this is meant to be only a sampling of where some really good opportunities are within the vast market that is the US. It is hoped that with such an overview, more interest in the US market will be encouraged, and following that, a closer look into the states and cities, at least with these three for a start.

 
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