Posted on Wednesday, January 5, 2011
WASHINGTON, DC-The US commercial real estate industry started off 2010 with eyes firmly fixed on one of the few bright spots: foreign investors said they were chomping at the bit to invest in the country, particularly in such gateway cities as New York City, Washington, DC and Chicago.
While some of this investment did materialize - in some cases from unlikely sources such as China-Brookfield, for instance, secured a $800 million refinance package on 245 Park Ave. in Manhattan [http:///news/1788_1788/newyork/304295-1.html] from Bank of China-the levels were way off from expectations.
That may be different this year, according to the latest survey by the Association of Foreign Investors in Real Estate. Foreign investors were fired up to invest in the US last year, AFIRE CEO James A. Fetgatter acknowledges. "There was some skepticism on my part as to whether that attitude would translate into action," he tells GlobeSt.com.
His fears - namely that investors would ultimately shy away due to global economic concerns - were correct, especially as fears mounted that there would be a double dip recession. For 2011 "I think that fear is over and we will see more action." However investors are still cautious and are likely to stay in solid markets such as Washington, DC and New York City, as the new survey indicates.
The survey, which was conducted in the fourth quarter of 2010 by James A. Graaskamp Center for Real Estate, Wisconsin School of Business, found that more than 60% of respondents indicated that the US offers the best potential for capital appreciation, a margin of 54 percentage points over second-ranked China. This is the highest positive response to this question since it was first asked in 2000, AFIRE says, and is a dramatic reversal from 2006 when it reached a lowest level of 23%.
- Investors overwhelmingly chose New York City and Washington, DC as the two top global cities for their real estate investment dollars;
- 72% of respondents say they plan to invest more capital in the US in 2011 than they did in 2010;
- When ranked among countries targeted for real estate investment in 2011, the US score was quadruple that of the UK;
- The top five destination cities in this year's survey were 1) New York City (#2 in 2010); 2) Washington, DC (#1 in 2010); 3) Boston (#4 in 2010); 4) San Francisco (#3 in 2010); and 5) Los Angeles (#5 in 2010).