AFIRE Survey: U.S. Offers Foreign Investors Bang for Their Buck

January 4, 2011
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user edenpictures

Foreign real estate investors would do well to look toward U.S. shores, according to the Association of Foreign Investors in Real Estate’s 19th annual survey. AFIRE, which surveys respondents holding more than $627 billion in global real estate, including $265 billion in the United States, found that investment opportunities are stronger than they have been for the last decade.

The survey, which was conducted in the fourth quarter of 2010 by James A. Graaskamp Center for Real Estate at the Wisconsin School of Business, found that more than 60 percent of respondents indicated that the U.S. offers highest potential for capital appreciation. That figure is the highest response to the question since it was first asked in 2000 and a major upswing from 2006, when it was at its lowest level of 23 percent. China was ranked second.

According to AFIRE chief executive James Fetgatter, fear of a double-dip recession is fading and investors are growing more enthusiastic about the prospects for the U.S. economy, meaning that they are looking to invest here. He likened investors’ strategy not to a rifle but a shotgun, a targeted effort focused on New York City and Washington, D.C., with the exception of multi-family housing.

Nearly two-thirds – 72 percent – of respondents said that they plan to invest more capital in the U .S. this year than last year. Moreover, when ranked among countries targeted for real estate investment this year, the U.S. score quadrupled the second-ranked United Kingdom.

AFIRE found that the top five U.S. cities for foreign real estate investment are, in order: New York, Washington, D.C., Boston, San Francisco and Los Angeles. Preferred property types for investment were, in order: multi-family, retail, hotel, office and industrial.

Overall perspectives on the market ranged from optimism to stability. While 55 percent of respondents said they felt about the same about the market as last year, 40 percent said they were more optimistic than at the start of 2010. Only 4 percent said they were more pessimistic.