Do you believe foreign investment will play a large role in California’s real estate recovery?

  • Yes (82%, 37 Votes)
  • No (18%, 8 Votes)

Total Voters: 45

At the dawn of the Great Recession in 2007, the Los Angeles (L.A.) hotel market was cut-off at the knees. It seems, however, that things have turned around for the City of Angels as international visitors come wielding their strong currencies with even stronger desires for a taste of the West L.A. shopping experience and a place to lay their heads in one of L.A.’s luxury hotels.

In order to meet this demand, investors have spent more than $550 million on hotel properties in the downtown and greater Los Angeles areas so far this year, a 77% increase over the same period last year. Industry experts unanimously agree that these bullish trends in the L.A. hotel market will persist as this impressive resurgence of international tourism in Southern California continues.

first tuesday take: A mini-boom in L.A.’s hotel market comes as no surprise to us here at first tuesday. As we have written recently, foreigners have a great interest in both visiting and investing in California as many of them presently enjoy strong currencies relative to the U.S. dollar. [For more information on positive growth in the Southern California hotel market, see the July 2011 first tuesday article, Welcome to the Hotel California.]

Positive growth in the hospitality industry is usually indicative of impending growth in residential real estate, as it signals increased jobs and thus greater consumer purchasing power in a local economy. However, recent successes in L.A.’s hospitality industry are a bit of a red herring in this regard. Hotels are not being built in L.A. to serve a burgeoning business boom or even to cater to local tourism demands. Building and investment activity is rising to meet the demand posed by traveling foreigners.

However, California real estate brokers and agents will still want to pay attention to positive trends in this niche market. While many of the wandering Aussies and Japanese are spending their money on Rodeo Drive, imagine how many of them are shopping for a vacation home or investment property in your neck of the woods. [For more information on representing foreign buyers, see the November 2011 first tuesday article, Wealth from other nations: foreign investments in California real estate.]

re: “Brisk sales in hotels in LA” from the Los Angeles Times