AFIRE: Foreign investor appetite still strong for US real estate

The results of the 2012 AFIRE Annual Survey have revealed that foreign investors intend to continue seeking out real estate investment opportunities in the US, focusing on New York.

Foreign investors plan to allot more capital to equity investments in the US in 2012 than in 2011, according to the 2012 Association of Foreign Investors in Real Estate (AFIRE) Annual Survey.

In addition, the results of the survey, presented by François Ortalo-Magné, Albert O. Nicholas Dean of the Wisconsin School of Business at the AFIRE Winter Conference in New York on Wednesday, showed that foreign investors expect to allot more than half of their global acquisitions budgets to US transactions.

Members of the trade organisation plan to make a total of $687 million in real estate equity acquisitions in the US in 2012. This is up from the $562 million acquisitions that were completed in the US by AFIRE members in 2011. AFIRE's annual survey showed that its members expect to allot $1.05 billion to equity acquisitions globally, up from the $869 million completed globally in 2011.

“We noticed last year that you had completed more than you had planned,” said Ortalo-Magné after pointing out that the dollar volume of completed US acquisitions in 2011 ($562 million) exceeded the planned acquisition volume for last year ($529 million).

Appetite for real estate opportunities in the US remains strong in 2012. Within the US, New York still ranks as the most attractive to foreign investors for real estate investment opportunities, with roughly 36 percent of respondents naming the Big Apple as the top city to invest in. Washington DC made second place, with roughly 23 percent of respondents naming the nation's capital. San Francisco, at 15 percent, came in third.

The survey also showed that, just as it did in 2011, the US tops the ranking of countries in which foreign investors plan to make real estate acquisitions for 2012, and by a rather wide margin. Of the AFIRE members surveyed, they expect nearly 50 percent of offshore capital to be invested in the US, up from the 45 percent executed in 2011. Following the US in a distant second place was the UK, with foreign investors expecting a little more than 11 percent of capital to be allotted to real estate transactions in that country. In third place was Germany, at roughly 9 percent.

“Investor appetite remains strong for the US versus the rest of the world. You really like investing in the US,” said Ortalo-Magné to the delegates who voted in the survey.