U.S. Remains Top Choice Among Foreign Investors

The U.S. still offers the most stable and secure options for foreign commercial real estate investors, according to the Association of Foreign Investors in Real Estate 20th Annual Survey, conducted among AFIRE members in 4Q11. But many investors are hoping to see “improved property fundamentals” and the “repeal of the Foreign Investment in Real Property Tax Act” before increasing their investments in U.S. real estate. Sixty percent of survey respondents say they plan to grow their investment in U.S. real estate in 2012, down from 72 percent last year. Survey respondents currently hold approximately $338 billion in U.S. real estate.

The U.S. also provides the best opportunity for capital appreciation, with 42.2 percent of the vote, according to the survey. However, its first-place score fell from 64.7 percent in the last survey, as Brazil increased its share with 18.6 percent of the vote.

“Foreign real estate investors have made clear there is considerable pent-up demand for U.S. real estate awaiting better real estate fundamentals and relief from FIRPTA regulations,” said James A. Fetgatter, chief executive officer of AFIRE. “If the investing environment improves, the U.S. is poised to return to its safe haven status.”

Top U.S. Cities for Foreign Investment in 2012

1. New York
2. Washington, D.C.
3. San Francisco
4. Boston
5. Los Angeles

Source: Association of Foreign Investors in Real Estate 20th Annual Survey