January 30, 2008

Written by Randyl Drummer ( 此邮件地址受阻挡spam的自动程序保护，需要激活Javascript功能才能查阅。 )

China Makes a Big Splash, Making Up Half the Top 10 Most Attractive Markets For Foreign Investment

Although U.S. investors may be wringing their hands over the domestic real estate market, American property markets remain the envy -- or at least the favorite investment target -- among foreign investors, and by a wide margin, according to an annual trade group survey released this week.

The Association of Foreign Investors in Real Estate (AFIRE) polled its members on their top picks globally for investment dollars. Of the $700 billion in international holdings held by AFIRE members worldwide, $230 billion (nearly one-third) is in U.S. markets.

New York City and Washington, D.C. are the two top U.S. markets, with London tying D.C. for second place in the world.

Shanghai moved from ninth place last year to fifth this year, and two other Chinese gateways, Singapore and Hong Kong, cracked the top 10. Singapore, with one of the fastest growing economies on the planet, rocketed from 24th place to sixth, tying Tokyo.

The jump in investor confidence in China is significant, said James A. Fetgatter, AFIRE chief executive, who noted that five of the top 10 markets are in Asia.

"For the second time in three years, China has been voted as the country offering the second-best chance for capital appreciation after the U.S.," he said. "Even more significant is that the gap between the U.S. and China has narrowed from 27 percentage points in 2005 to fewer than five percentage points in 2007."

Sydney, Australia, also made the top 10, moving from 15th to 9th.

The U.S. was overwhelmingly chosen as the most "safe and secure" market for foreign property investments, by 56% of respondents, according to Washington, D.C.-based AFIRE. No other locale came close, with Germany ranking "most secure" by 11% and the United Kingdom and Australia tying for third at just under 9%.

However, the rankings tightened when investors were asked which country held the most potential for capital and asset appreciation. The U.S. maintained and expanded its No. 1 ranking with 26.2%, up from 23% in 2006. But China moved from third to second place, sprinting from being the choice of 14.8% of foreign investors in 2006 and 21.4% in 2007, significantly closing the gap on the U.S. India, Russia andMexico rounded out the top five in that category.

The survey showed that respondents were generally bullish on U.S. real estate in the last three months of 2007 -- despite the credit crunch and mortgage meltdown, which peaked in August and September. On average, respondents said slightly more than half of their planned global acquisitions in 2008 will be in America, roughly the same as the previous year.

They plan to spend 16% more on those U.S. acquisitions. However, on average, respondents said they Planned to increase total global spending for real estate by an even greater percentage in 2008; more Than 20% .

That suggests growth in non-U.S. investment is on the rise, despite a U.S. exchange rate favorable to most foreign buyers. Interestingly, 85% of survey respondents said the weak dollar would not prompt them to increase their U.S. investment allocation.

Many 2008 commercial real estate forecasts predict that foreign buyers, along with REITs, pension funds, insurance companies and other institutional buyers, will help prop up markets reeling from the credit crunch, subprime debacle and the subsequent retreat of private equity buyers.

The kind of product sought by international investors is also changing. In fact, the ranking of U.S. property types most favored by foreign buyers was almost inverse from the previous year. Retail jumped to No. 1 from No. 5 and office fell from No. 1 to No. 5. Multifamily fell from second place in 2006 to fourth in 2007 and hotels rose to No. 2 from third place in ’06. Industrial property edged to third place from No. 4 in 2006.

Among U.S. cities, the top five most preferred locations remained unchanged from the previous year: New York, Washington, D.C., Los Angeles, San Francisco and Seattle.