Foreign investors will increasingly turn to US real estate markets in 2010 in their search for capital appreciation, according to the annual survey by AFIRE.
The Association of Foreign Investors in Real Estate revealed that 51 percent of its nearly 200 members, believed the US would be the best global opportunity for boosting returns – the highest level recorded since 2003. Less than a quarter of those questioned in 2007 and 2006, agreed the US provided the best prospects for capital appreciation.
AFIRE chairman and PGGM senior real estate portfolio manager Werner Sohier
The UK followed as the second best country for capital appreciation this year, with 30 percent of the vote compared to 2 percent in 2006. 
New money is becoming available and the AFIRE survey points to an increased focus and interest in a few select markets for 2010, especially London and in the US, where prospects appear to be brightening.
In the wake of the credit crisis and massive property price declines, AFIRE chairman and PGGM senior real estate portfolio manager Werner Sohier said investors would be more selective in 2010.
“New money is becoming available and the AFIRE survey points to an increased focus and interest in a few select markets for 2010, especially London and in the US, where prospects appear to be brightening,” he said.
However, that’s not to say foreign investors aren’t cautious. For the first time in the survey’s history, the number of investors naming the US as the “most stable and secure country” fell below 50 percent level. Just 44 percent of AFIRE members surveyed agreed the US was the most stable country, compared to 53 percent in 2008 and 57 percent in 2007.
But as AFIRE chief executive James Fetgatter noted: “Opportunity lies within this instability.”
The AFIRE survey, conducted in the fourth quarter of 2009, also revealed two-thirds of those questioned planned to increase their investment in the US this year compared with last. The foreign investors said they planned to increase their equity investments by an average of 62 percent in 2010, and their debt investments by 83 percent.
As of the middle of the fourth quarter last year, foreign investors said they had deployed just 62 percent of their expected capital for debt investments for 2009, and just 43 percent of their expected equity allocations. In the US, that figure was even starker, with investors saying they had deployed just 35 percent and 23 percent of their expected allocations to debt and equity investments respectively.
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