Foreign Real Estate Investors Favor the U.S.

Foreign Real Estate Investors Favor the U.S.

Jan 19, 2010 - CRE News A majority of foreign real estate investors favor the United States and are poised to increase their activity here this year.

Their allocations for equity investments in U.S. commercial properties this year are up 62% from a year ago and their allocation for debt on those properties are up 83%, according to a fourth-quarter survey by the Association of Foreign Investors in Real Estate. The 200-member Washington, D.C., group, also called AFIRE, holds $842 billion of real estate, including $304 billion in the U.S.

A total of 51% of those surveyed identified the U.S. as providing the best opportunity for capital appreciation, up from 37% that identified the U.S. as the best market a year ago. It is the highest score the country has received since 2003, when it also was rated as the best market by 51% of AFIRE’s members.

By comparison, England ranked number two in terms of prospects for appreciation, cited by 30% of AFIRE’s respondents, while China ranked third with 10% of the responses.

However, London edged out Washington as the most preferred local market, while New York ranked third. A year ago, Washington was number one and London was second.

“The AFIRE survey points to an increased focus and interest in a few select markets in 2010, especially London and in the U.S.,” said AFIRE chairman Werner Sohier, who is also senior portfolio manager for real estate at PGGM, an investment vehicle for Dutch pension funds.

Only 44% of AFIRE’s members ranked the U.S. as the country providing the most stable and secure environment for real estate investments. That was down from 53% who rated the U.S. as the most stable a year earlier.

Still, the U.S. remains by far the leader in terms of perceived security and stability. Germany ranks number two in that category, cited as the most secure and stable by 21% of the responses and Canada placed third with 14%.