Return of the King: NYC Takes Back Global Investment Crown from London

Mike Ratliff, Senior Associate Editor

With the new year, the results are in from the Association of Foreign Investors in Real Estate’s 23rd annual survey of foreign investors in real estate. And New York is the winner!

The U.S. remains the top destination for investment, with 90 percent of respondents saying they are planning to maintain or increase the size of their U.S. portfolios. When it comes down to where the money is coming from, two-thirds of respondents expect China to become the largest source of capital in the U.S. real estate market in 2016 and beyond, though 10 percent expect it could happen as early as 2015.

New York reclaimed its long-held spot as both the top global and top U.S. city in the eyes of foreign investors after London nudged into first place last year. Other major moves in the list of top five global cities include Tokyo and Madrid replacing Houston and Los Angeles in the respective number four and number five spots.

Speaking of Madrid, investors remain bullish on Spain. The country secured second place for countries that provide the best opportunity for capital appreciation for the second year in a row (after the U.S.).

“There does appear to be a lot of interest in Spain, as confirmed by the survey,” said James Fetgatter, chief executive, AFIRE. “We compared the recoveries in the U.S. and Europe in a conference last summer in London. Spain is clearly in the forefront of getting their non-performing loans to the market, but there was wide disagreement as to whether the pricing was too rich, and whether there was too much capital chasing these deals.”

Another interesting find in the survey is that multi-family assets moved to the top spot for preferred U.S. property types after being ranked fourth last year. Within the multi-family category, 74 percent of respondents to the survey said that mid- and high-rise assets faced a low risk of obsolescence when factoring in demographic and technological changes—only 42 percent of respondents said that garden apartments shared the same low risk.

As seen to the right, Washington, D.C., dropped to number five from number four as far as U.S. cities go.  Fetgatter contributes this hit to other cities netting a greater benefit from tech and energy drivers. A tightening Federal budget likely also played a role. Nonetheless, remaining in the top five still bids well for our nation’s capital in 2015.

AFIRE members have an estimated $2 trillion or more in real estate assets under management globally. The data charts from the survey results are available.