In 2001, Foreign Real Estate Investors
to Focus on Four US Cities
Washington, DC
(January 8, 2001) - Foreign investors planning to
buy commercial real estate in the US this year will be shopping
predominantly in New York, San Francisco, Boston, and Washington
DC, according to a survey released today by the Association
of Foreign Investors in Real Estate (AFIRE). The ninth annual
survey was conducted among the association's members who
collectively have nearly $45 billion invested in US real
state.
"At no time during the eight years in
which we have conducted the survey, has our members' consensus
about which cities are the best prospects for their real
estate investment dollars been this strong," said Mr. James
Fetgatter, Chief Executive of the Association. "New York
and San Francisco were solidly in first and second place,
garnering an overwhelming majority of the votes. Boston
and Washington, DC had respectable third and fourth place
tallies, but no city named after that was anywhere close
in the voting." In 1999, AFIRE members ranked the top five
cites as: New York, Washington DC, San Francisco, Boston
and Chicago, respectively.
"There was no question that the resounding
note of our annual conference was the significance of the
24-hour city," said Mr. David Agnew, Chairman of the Board
of AFIRE and CEO of the Amstar
Group. "Intellectual capital is the most important ingredient
to the success of business today, and the intellectual capital
wants to live, work and be entertained in the same place.
Far and away that is the one characteristic these cities
share."
Source: AFIRE Annual Investment
Survey - 2000
Despite US Strength, Germany Expected
to Slow Investments
Of the foreign investors responding to the survey, 90% said
they would either increase or maintain their 2000-level
of investment in US real estate this year. Only 10% said
they would decrease. By far, the US was deemed to provide
the most stable and secure real estate investment. And,
equally with Japan, it was voted as the country with the
best opportunity for capital appreciation. A vast majority
of investors responding to the poll said they did not anticipate
a quarter of negative GDP growth in the American economy
until 2004 or later.
The one significant change projected by
the survey in the coming year was a downturn in German investment.
"Without question, for the last five years, the Germans
have been the largest foreign acquirers of US real estate,"
added Mr. Fetgatter. "But the overwhelming sentiment among
our members is that German investment will decrease in 2001."
Mr. Fetgatter said that several factors may affect German
investors' decisions to invest in the US. "The falling euro
is making US and non-European Union real estate more expensive.
In addition, spurred by the technical market, other opportunities
are competing for deutsche marks in Germany. Finally, the
US is no longer a buyer's market as it was in the mid- to
late-90's."
Preferred Property Types: Offices and
Multi-family
Among foreign investors, there's as much consensus about
their preferred property types as there is about their preferred
cities. For the sixth year in a row, foreign investors have
named office buildings as their preferred investment for
this year. For the fourth time in six years, they have named
hotels as the property type in which they are least likely
to invest. And, they have sharply reversed their opinion
for retail properties.
Not since 1996, have foreign investors
ranked retail properties so low on their list of preferred
properties. Retail properties slipped from second place
into fourth in this year's survey. At the same time, multi-family
properties rose a notch to the number two spot. In 1997,
multi-family properties were ranked as the least favorable
investment. "The rankings are really consistent with current
economic conditions," Fetgatter added. "Many investors feel
that retail is vulnerable to the Internet and to a slowing
of the economy and consumer spending. The interest in multi-family
reflects the United States' high population growth partly
as a result of immigration. Among the comments recorded
by our members is the thought that hotels may be the best
'high risk' opportunity. It will be interesting to see what
happens in the next year."
Washington-based AFIRE was founded in
1988. AFIRE members have a common interest in preserving
and promoting investment in cross-border real estate. Currently,
AFIRE has 155 members representing 17 countries.
