The US is the most sought-after location for foreign real estate investors, dominating other markets worldwide in terms of top cities; stable and secure investments; and opportunities for capital appreciation, according to the Association of Foreign Investors in Real Estate’s (AFIRE) 21st annual survey.
For the first time in the survey’s history, four of the five top global cities for foreign investors are in the US. These include New York, San Francisco, Washington DC and Houston, with London as the sole non-US top-ranked city.
The dominance of US cities among foreign investors is a reflection of the country as “the most transparent, professional and liquid real estate market in the world,” said Christoph Kahl, chairman of Jamestown US-Immobilien and newly elected AFIRE chairman, in a statement. “Particularly as compared to other countries, population growth in the US will be a major driver for long-term capital appreciation and is one of the reasons why the institutional investment community worldwide favors the US for its real estate allocations.”
Investors’ choice of San Francisco and Houston, in particular, reflected the tendency for real estate investment to follow jobs, particularly those in technology and energy, which are considered to be among the top new economic drivers, noted James Fetgatter, chief executive of AFIRE. “As other economic drivers emerge, it will not be surprising to see investors seek opportunities beyond the traditional New York and Washington DC markets.”
The US was deemed the country providing the most stable and secure real estate investments, receiving 55 percent of the vote from respondents – significantly higher than second-ranked Canada, which garnered 18 percent of votes. The US also was the pick among 55 percent of respondents for capital appreciation opportunities, compared with just 17 percent for second-ranked Brazil.
Thirty-nine percent of participants also expressed a more optimistic view of the US real estate market than they did one year ago. In fact, 81 percent expect to bulk up their real estate holdings in the US, with 31 percent anticipating a major increase in US portfolio sizes. Additionally, 71 percent of investors said that improving fundamentals will make secondary US markets more attractive in 2013.
Within the US, multifamily continues to be the most-preferred property type, followed by industrial, retail, office and hotel, according to the survey.