Asian investors on a buying spree of local real estate. Sovereign wealth from oil-rich Persian Gulf and Middle Eastern countries pouring into the region.
These headlines could sum up the current boom in foreign investment in the L.A. region, but they also describe past waves of foreign wealth hitting the city's shores.
Indeed, L.A. has been on the receiving end of several booms of foreign investment, most notably in the late 1970s and late '80s. L.A.'s geographical position as gateway to the Pacific Rim, its attractive climate, the presence of Hollywood and recurring real estate booms all beckoned to foreign investors.
"As L.A. increasingly became a global city, it attracted more foreign investment," said Bee Canterbury Lavery, an international protocol consultant who served as protocol chief to the late Mayor Tom Bradley.
Although L.A. was settled by the Spanish, for much of its early history, foreign investment was a relatively minor component of the overall economy. Most capital came either from San Francisco or from big New York financiers.
But in the 1910s and 1920s, as movie studios were established, the early studio heads many of whom were immigrants from Eastern Europe brought in European talent and some foreign money. The 1920s also saw a land boom that attracted foreign investors, chiefly from Britain. Indeed, the British have quietly amassed what's believed still to be the largest real estate and investment holdings by foreigners in L.A.
"British investments in Southern California real estate have been consistent for the past 100 years," said D.J. Waldie, public information officer for the city of Lakewood who has written on Southern California in the post-World War II era.
Then the oil price and supply shocks of the 1970s ushered in the first major wave of high-profile foreign investment, mostly from royal families in the oil-rich Arab countries of the Middle East. Members of the Saudi royal family bought property in Beverly Hills, while others simply cavorted in the area.
"Saudi princes and princesses all partied here, with many staying at the Beverly Hilton hotel," Lavery said.
In 1987, an investment fund controlled by the Sultan of Brunei purchased the Beverly Hills Hotel from Marvin Davis, while the lavish lifestyle was epitomized by Sheik Mohammed al Fassi. The sheik bought a mansion on Sunset Boulevard in Beverly Hills and decorated it with a copper roof and nude statues. Irate neighbors cheered when an arson fire burned much of the mansion to the ground on New Year's Day 1980.
Meanwhile, tens of thousands of wealthy Iranians fled their country and settled in the Beverly Hills-Westwood area when the Shah fell in 1979, buying up local mansions and starting their own businesses. The Shah's sister had considerable holdings in the hills above Beverly Hills.
By that time, the other major wave of foreign investment was well under way from Japan. Lavery said Japanese investment in L.A. really began in 1975 when then-Emperor Hirohito paid an official state visit to the U.S., stopping first in Los Angeles.
Japanese investment really picked up steam in the mid-1980s as the stock market and real estate bubble in Japan swelled. Japanese companies bought stakes in office buildings downtown and on L.A.'s Westside.
In 1986, for example, Sumitomo Bank bought the 1000 Wilshire Blvd. building by the Harbor (110) Freeway in downtown for what was then a record price of $150 million. A couple years later, Meijiseimei Realty of America bought half of the Wells Fargo building at 444 S. Flower St. for $147 million. Even Hollywood got its share of Japanese investment when Sony Corp. purchased Columbia Pictures for $3.4 billion in 1989.
The Japanese buying spree was so intense that it fed a backlash, exemplified by book and movie "Rising Sun," which depicted corrupt Japanese business leaders cutting deals in downtown L.A. office towers.
But the Japanese investments came to an abrupt halt in 1990 as Japan's stock market and real estate bubble burst and the Southern California real estate market went into its own tailspin. Many Japanese companies that had splurged on local real estate suddenly found themselves short of cash and were forced to sell their trophy properties in L.A., sometimes at less than half of what they paid a few years earlier.
The 1992 riots and the lengthy downturn of the early 1990s kept foreign investment to a minimum until new foreign investors emerged. By the mid-1990s, Korean businessmen were buying up cheap office space and real estate in the Mid-Wilshire District, while Chinese businessmen and companies were investing in the San Gabriel Valley and buying homes on the Palos Verdes Peninsula. This was aided by a small surge in investment from Hong Kong as the Chinese takeover of that British colony neared in 1997.
"Now it's the Chinese investment that's in full flood," said Jim Flanigan, former Los Angeles Times business columnist who is now writing a book on globalization and Los Angeles.
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