Foreigners plan to spend more on U.S. real estate

Jan 12, 2009 @ 3:02 pm

By Janet Morrissey

Foreign investors plan to spend significantly more money on U.S. real estate in 2009 than they did last year.

A study released today by the Association of Foreign Investors in Real Estate showed that equity investors plan to boost real estate investment activity by 73% in the United States and 40% globally.

“Our investor members have expressed a growing confidence and interest in U.S. real estate,” James A. Fetgatter, chief executive of the Washington-based association, said in a statement. “Their investment plans for 2009 for the U.S. resemble the flight to quality that is creating the demand for U.S. Treasuries.”

The 17th annual study surveyed about 200 of the association’s members, who collectively hold $1 trillion worth of real estate.

Washington topped the list of cities in which foreign investors are most likely to park their cash this year.

London and New York ranked second and third, respectively, while Tokyo and Shanghai, China, finished a distant fourth and fifth on the list.

The study showed that half of investors’ favorite cities for investing in real estate this year are in the United States.

This differs from a year ago, when five of the top 10 cities were in Asia.

The top U.S. cities were Washington, New York, San Francisco, Los Angeles and Houston.

Investors named apartments as their favorite property type. That was followed by office, industrial, retail and hotel properties.

Also, most investors said that they are having little trouble finding attractive U.S. real estate opportunities. Fewer than 20% of respondents said that it was “difficult” to find opportunities — which is the lowest percentage of people holding this opinion in the past five years, according to the report.

In 2004, for example, 59.4% said that they had a tough time finding opportunities.

The current report showed that 53% of respondents named the United States as providing the “most stable and secure” real estate investments.

This was followed by Germany and Switzerland, which each captured 11.3% of the vote. Australia and Canada tied for third place, each with 4.8% of the vote.

About 37% named the United States as the country that provides “the best opportunity for capital appreciation.”

Brazil was second, and China ranked third. The United Kingdom and India were fourth and fifth, respectively.

“As they expect more favorable investment fundamentals to return in 2009, our members are poised to move more aggressively on acquisitions,” C. MacLaine Kenan, the association’s newly elected chairman, said in a statement. He is the executive director of real estate investment in the Atlanta office of Arcapita Bank BSC, a global investment firm based in Manama, Bahrain.

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