2013 Update on Foreign Investment in Commercial Real Estate

According to the latest survey of the Association of Foreign Investors in Real Estate (AFIRE), which was released on January 7, 2013, the U.S. dominates the list of countries where its members plan to invest in commercial real estate in 2013.

The top five countries that the survey revealed to be the most stable and secure for commercial real estate investment in 2013 are:

1. U.S.
2. Canada
3. Germany
4. Australia
5. United Kingdom

For the first time in more than a decade, four of the five top cities for commercial real estate investment are in the United States: New York; San Francisco; Washington, DC; and Houston. Ranking second is London.

These U.S. cities will be of most interest to foreign investors in 2013:

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

Preferred property types will include multi-family, industrial, retail, office and hotel.1

The AFIRE survey echoes the sentiments of other foreign investors as well. For example, the Norwegian Government Pension Fund, the largest sovereign wealth fund in the world, announced it is actively seeking potential real estate partners to invest in New York, Washington and Boston.2

In addition, the Xinyuan Real Estate Company (a Chinese company listed on the New York Stock Exchange) recently announced plans to develop multifamily residential properties in New York and other U.S. cities. This project is intended to serve wealthy Chinese citizens who are interested in investing U.S. apartment properties.3

In addition to commercial real estate, foreign investors are also very interested in purchasing single-family residential properties in the U.S. According to the National Association of REALTORS® (NAR), investors from Canada, China (PRC, including Hong Kong), Mexico, India, and the UK were reported as having the most interest in buying homes in the U.S. during 2011-2012, with Canada and China having the fastest growth.

International buyers were purchasing property concentrated in Florida, California, Texas and Arizona. Those states accounted for 51 percent of international buyers, with Florida the fastest-growing destination of choice. Buyers are evenly divided between clients with permanent residences outside the U.S., who purchase property for investment, vacationing or visits to the U.S. shorter than six months; and recent immigrants (less than two years) or temporary visa holders staying in the U.S. for more than six months for professional, educational or other reasons.

NAR provides additional details at their website.

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