US real estate to draw more foreigners in 2016: survey

Seattle

MOST foreign investors expect to put more money into US property this year than they did in 2015, with New York remaining the top target market worldwide, according to a survey by the Association of Foreign Investors in Real Estate.

Sixty-four per cent of respondents said they intend to make modest or major increases to investments in US real estate this year, while 31 per cent expect to maintain their holdings or reinvest sales proceeds into other US assets, according to the 24th annual survey by the group, known as AFIRE. None of the respondents plan a major decrease. About half of the group's roughly 200 members participated in the survey.

"This is a very strong response," Jim Fetgatter, chief executive of Washington-based AFIRE, whose members hold about US$2 trillion of real estate globally, said in a phone interview. China's economic slowdown, Brazil's recession and Europe's immigration crisis underscored for international investors that "the US, at the moment, really is the safest place for them to go".

Foreign purchases of US real estate have soared since the financial crisis, jumping to US$87.3 billion of completed deals last year, from less than US$5 billion in 2009, according to Real Capital Analytics Inc Investors from Canada, Asia, Europe and Australia bought stakes in office towers, warehouses, apartment buildings, shopping malls and hotels in search of relatively higher yields. Manhattan captured US$23.5 billion, or 27 per cent, of 2015 purchases, Real Capital data show.

The US also ranked first for countries with the best opportunity for price appreciation in 2016, followed by Brazil, Spain, Ireland and the UK, the AFIRE survey showed.

London and Los Angeles were the second- and third-most-popular cities for real estate investments in the survey. Berlin climbed three places to No 4, the first year a German city reached the top five. Paris tied with San Francisco for fifth place, according to AFIRE. BLOOMBERG