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SURVEY: FOREIGN INVESTORS FAVOR RETAIL

BY BRANNON BOSWELL

For the second year in a row, retail has tied with multifamily as the favorite property type of international investors, according to the annual membership survey of the Association of Foreign Investors in Real Estate.

But attractive U.S. properties are so difficult to find, respondents said, they plan to reduce the U.S. portion of their global real estate acquisitions this year to 55 percent, from 71 percent last year. Japan, Eastern Europe and Australia are among the markets that will see increased investment. Nearly 60 percent of the respondents said finding U.S. investment opportunities was “very difficult” in 2004, compared with the 32 percent who had said so the year before.

But foreign investors are by no means abandoning U.S. real estate, says James Fetgatter, the association’s chief executive. “According to our survey, by substantial margins, the U.S. continues to rank both as the No. 1 country for ‘stable and secure’ real estate investments and the country offering the ‘best opportunity for capital appreciation,’ ” he said.

“In addition, for the third year, Washington, D.C., continues to rank as foreign investors’ top global city and the best city for investment in the U.S.,” Fetgatter said. “It’s just that in an increasingly global market, investors are open to exploring new opportunities.”

London and Tokyo ranked second and third, respectively, among the preferred global markets. After the United States, respondents cited the United Kingdom and France as the countries providing the most-stable real estate investments. Within the United States, the four most popular cities after Washington, D.C., were New York, Los Angeles, San Francisco and Miami/Ft. Lauderdale/West Palm Beach.

The Washington, D.C.-based Association of Foreign Investors in Real Estate’s 160 members represent 17 nations and collectively have about $300 billion invested in global real estate.