FEB 2007
VOL. 2 
Investment Notes
At the start of 2007, global real estate investors say they still find the U.S. the most attractive market overall. But they are less enthusiastic than they have been, according to a survey by the Association of Foreign Investors in Real Estate. In the 15th annual survey of AFIRE members (whose combined portfolios add up to $600 billion) 23% identified the U.S. as the place that provides the best opportunity for capital appreciation, followed by India, China, Germany and Russia. But in years past, far more AFIRE members favored the U.S.-- 44.4% in 2005 and 53.8% in 2004. The U.S. is only 5 percentage points ahead of India, which jumped from sixth place last year.
What Country Affords the Best Opportunity for Capital Appreciation? |
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Global investors are also taking on more risk to achieve their investing goals, Afire notes: 30% of respondents say they are moving into new and non-core property types, including infrastructure, senior housing and resorts. One-fifth of respondents say they are looking into development, in addition to acquisitions.
Despite some eye-popping sale prices in 2006, international investors are less frustrated by a lack of appropriate opportunities. At the end of 2004, 59.4% of survey respondents had said that it was “very difficult” to find attractive real estate opportunities. Now, just 37.5% say that it’s very difficult to find suitable assets.
How much will these investors commit to the U.S. market? The median amount by which the respondents say they plan to increase U.S. investments over 2006 levels is 53%. What are their favorite markets? New York jumped back to the top of the U.S. list (London is still the No. 1 city globally for this group). Last year Washington topped the U.S. list and is No.2 for 2007. Los Angeles and San Francisco holds the third and fourth slots, as they did a year ago. But Seattle moves up to No.5, jumping from ninth place in last year’s survey and 15th the year before.