Financial Crisis - American investors retreat from Europe

The American Realty Industry’s woes are not limited to their home turf alone…

At the peak of the real-estate boom, U.S. investors dominated the game in European office space scene. Now, with the exception of a few deals, the Americans have retreated and are now net sellers of European commercial property.

In the first half of 2009, U.S. investors spent €407 million ($581.7 million) on office space assets in Europe, down 98% from the peak of U.S. involvement in the first half of 2007, when Americans invested €20.7 billion in European property, according to a report by property-services group CB Richard Ellis (CBRE).

Among the larger European sales by an American property investor this year is developer Tishman Speyer Properties' sale of the 182,000/ft² Centurium building in London, which it sold to German fund BVK International Immobilien-Spezialfonds for £128 million in an all-cash deal. Tishman bought the office building in 2005 for £100 million and sold it fully leased. With the recession looming over their heads, they aren’t interested in holding property anymore.

Wall Street Journal has made a few key observations regarding this. "What we're seeing is that the global investor, the American institutional investor, has pulled back dramatically," says Ray Torto, global chief economist for CBRE. "It is local and national investors who are buying space at the moment. The global buyers are not in the ball game."

In the first half of 2007, U.S. buyers accounted for about 16% of all transactions. By the first half of 2008, this fell to 9.1%. First half of 2009, U.S. investors accounted for just 1.6% of all commercial space transactions.

Wonder what happened to the trans-Atlantic love affair?!