Investors planning to boost US real estate exposure, says AFIRE

Most investors plan to increase their exposure to US real estate in 2016, according to a survey by the Association of Foreign Investors in Real Estate (AFIRE). 

The survey found that, despite moderate concerns about the impact of higher interest rates, 64% of respondents expect modest or major increases in their investment in US real estate this year.

A similar amount of respondents said the US was the country providing the most stable and secure real estate investments.

AFIRE said 31% expected to maintain or reinvest their investment, with no investors planning a major decrease.

The survey, conducted in the fourth quarter of last year by the Wisconsin School of Business, found that the US was regarded as providing the best opportunity for capital appreciation.

US multifamily and industrial tied for first place as preferred property types.

James Fetgatter, chief executive at AFIRE, said real estate fundamentals in the US were “sound”.

“The economy continues to remain strong – there are opportunities across all sectors of the real estate spectrum and in both gateway and secondary cities,” he said.

Recent legislation bringing relief from certain FIRPTA taxes should, he added, provide additional incentives for foreign investment in the US.

“In an environment regarded both as the safest and most secure in the world, with a strong currency and the best opportunity for capital appreciation, the US is the safest harbour,” he said.

For the second consecutive year, New York outranked London as the top global city for foreign real estate investment.

Berlin, ranking fourth, was the first German city to be named among the top five global cities.

Germany, which came in second to the US in terms of preferred destination, had only 19% of investors’ votes.

Despite the demand, 80% of respondents said it was “very” (35%) or “somewhat” (45%) difficult to find attractive opportunities in US real estate.

Frank Lively, chairman of AFIRE, said: “Foreign capital continues to view the US as the safe haven, typified by stable, albeit expensive, markets. 

“Investment in cities such as New York, Los Angeles and San Francisco, all ranked among the Top Five global cities, along with the historically stable and consistent Washington DC, have and will continue over time to reward cautious and careful institutional investors with the best risk-adjusted returns for their real estate capital.”