1/12/2015 | By Sarah Borchersen-Keto
Global investors continue to view the United States as the most stable and secure destination for real estate investment, according to a survey from the Association of Foreign Investors in Real Estate (AFIRE).
Germany ranked second and the United Kingdom was voted third in terms of the most attractive markets for cross-border investment.
More than 90 percent of global investors said they plan to maintain or increase the size of their U.S. real estate portfolio in 2015, according to the survey. A year ago, the survey showed 48 percent of respondents anticipating a modest increase in their U.S. holdings.
Respondents also ranked the U.S. first in terms of capital appreciation opportunities, followed by Spain in second place and the U.K. in third.
Two-thirds of survey respondents also expect China to become the largest source of capital into the U.S. in 2016 and beyond.
“The U.S. has become the first stop for foreign real estate investors. And with the continued creation of wealth in China, it is not surprising that they, along with other nationalities, are voting with their ‘dollars,’” said Thomas Arnold, the head of Americas real estate at the Abu Dhabi Investment Authority and chairman of AFIRE.
James Fetgatter, chief executive of AFIRE, noted that a significant portion of AFIRE’s membership believes Chinese interest in U.S. real estate will be permanent. “The feeling is that there’s so much money in China and that they are continuing to want to diversify and get some of the money out of the country,” he said.
New York Takes Top Slot for Global Investments; Washington, D.C. Continues to Slide
Meanwhile, the survey indicated that New York has regained the number one slot among cities for global investment, followed by London in second place and San Francisco in third. With the exception of last year, when London took the top spot, New York has held the top rank since 2010.
Among U.S. cities, San Francisco followed New York in second place. Houston, Los Angeles and Washington, D.C., came in third, fourth and fifth place, respectively.
Fetgatter said a significant development highlighted in the survey is Washington's continued slide in the rankings. Washington ranked 15th among global cities in the latest survey, whereas in 2011 it was ranked as high as third in the world for global investment opportunities, Fetgatter observed.
“It’s been a continual drop for the last four years,” he said.
Turning to property types, global investors picked multifamily as their preferred investment target, followed by the industrial, office, retail and hotel sectors.
AFIRE member firms have approximately $2 trillion in real estate assets under management globally. The survey was conducted in the fourth quarter of 2014 by the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business.