Foreign real estate investors say D.C. is No. 1 pick in U.S.
Monday, January 18, 2010, 10:11am EST | Modified: Wednesday, January 20, 2010, 3:00am
Foreign real estate investors say D.C. is No. 1 pick in U.S.Washington Business Journal - by Tierney Plumb Staff Reporter
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Vornado Realty Trust sold 1999 K St. NW for $207.8 million to international investors last year.
View Larger Foreign investors in real estate say D.C. is the top U.S. city for their dollars, according to an annual survey by the Association of Foreign Investors in Real Estate.
The survey was conducted in the fourth quarter of 2009 among nearly 200 members of the D.C.-based association, representing 21 countries. Respondents own more than $842 billion of real estate globally including $304 billion in the U.S.
According to the results, 51 percent say the U.S. provides the best opportunity for capital appreciation, compared to 37 percent in 2008 and 26 percent in 2007. Two-thirds of foreign investors in real estate plan to boost their investment in the U.S. this year compared to last. Half of the respondents expect the U.S. commercial real estate market to recover by or before the fourth quarter of 2010.
The U.K. is the No. 2 country for capital appreciation, said 30 percent, and third place is China, which got 10 percent of respondents’ votes.
Among U.S. cities with the best investment opportunities, D.C. and New York are at the top, with much stronger scores than San Francisco, No. 3. This year, Boston makes a significant jump into fourth place, and Los Angeles falls one spot into fifth place.
“Last year Washington was the No. 1 city but the spread was not nearly as great,” said James Fetgatter, chief executive, AFIRE. “This year the spread with D.C. and New York is much greater. The concentration is in London, Washington and New York.”
London is the top global city for investors’ real estate dollars, which is 31 points higher than D.C., then New York. London was No. 2 in the 2009 survey, separated from first-place Washington by only four points.
Foreign real estate investors “have always liked D.C. for a lot of reasons,” said Fetgatter. “It’s like a European city, there are height restrictions, and the deal sizes are do-able. They have always liked that but the icing on the cake is the government activism we have now.”
It’s the second year in a row in which multi-family topped investors’ preferred property type, followed by office, industrial, retail and hotel properties. The gap between the first and the last-favored property type has not been that wide since 2000, noted Fetgatter.
This year, the percentage of respondents selecting the U.S. as the most “stable and secure country” (44 percent) falls from 53 percent in 2008 and 57 percent in 2007, marking the first time that the U.S. has fallen below 50 percent in the survey’s history.
According to survey respondents, the top five emerging markets are China, Brazil, India, Mexico, and Turkey. Brazil and India, which were the first- and second-ranked emerging markets in the 2009 survey, each receive only half the votes that China receives as top emerging market.
More people say “green” features partially influence their property purchases, with 70 percent saying green attributes are “somewhat” of an influence, compared to 60 percent the year before.
