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Four U.S. Markets Ranked Among Top Five Global Picks for CRE Investment

Overseas Investors Showing Increasing Interest in Cities Beyond the Usual Suspects
January 8, 2014
Foreign commercial real estate investors ranked four U.S. markets among their top five global picks for acquiring commercial property, according to the results of the 22nd Annual Survey taken among the members of the Association of Foreign Investors in Real Estate (AFIRE).

The group's members rated New York, San Francisco, Houston and Los Angeles as the top two through five most attarctive markets for real estate investment. The number one pick was London, which displaced New York for the top spot for first time in three years.

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Washington, DC, a perennial darling among foreign investors, did not rank among the top five global cities this year. It fell into ninth place after Tokyo, Madrid, and Munich.

AFIRE member firms have an estimated $2 trillion or more in real estate assets under management globally.

“Our members’ increasing interest in cities beyond the powerhouses of New York, Washington and San Francisco points to the recognition of additional investment opportunities for foreign investors,” said James A. Fetgatter, chief executive of AFIRE.

The U.S. remains the most stable and secure country for investment by a wide margin of more than 50 percentage points over the second country, Germany. This is the widest margin since 2006.

The U.S. also remains as the country providing the best opportunity for capital appreciation according to AFIRE members, with a 26% margin over second-ranked Spain.

The U.S. leads the rankings for planned real estate acquisitions in 2014 with 48% of respondents projecting a modest increase in their U.S. portfolio size and 20% projecting a major increase. No respondents projected a major net decrease.

Investors said they are extremely positive about the direction of the U.S. real estate market. When asked how their perspective on the U.S. real estate market had changed since the beginning of 2013, 65% said it had remained the same; 30% said it was more optimistic.

“Foreign investors’ continued and growing interest in the U.S. real estate markets reflects fully functioning capital markets for both debt and equity that provide access to a broad range of investment opportunities,” said Steven Hason, managing director and co-head of Americas real estate for APG Asset Management US Inc. and the newly elected chairman of AFIRE. “Within the U.S, investors can participate in investments ranging from predictable core investments in gateway markets to potentially higher-yielding investments in secondary markets. And, in today’s markets, the survey reinforces AFIRE members’ beliefs that the U.S. provides an advantage for both safety and stability.”

The survey was conducted in the fourth quarter of 2013 by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.

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