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New York wins back global city real estate crown from London
Brief:The United States is again the top country for capital growth, say Association of Foreign Investors in Real Estate members, with New York again overtaking London as the top global city.
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New York has won back its crown as the top global city for foreign property investors, with the United States remaining the top country for capital growth, new data reveals.

New York is both the leading global destination and US city, overtaking London, which held the top rank last year in the Association of Foreign Investors In Real Estate (AFIRE) annual survey.

Washington was among the fallers in the AFIRE 2015 Foreign Investment Survey, coming bottom of the five-city US ranking and is 15th globally, down five places on last year.  Five years ago, it had around a third of points; this year it gained around 5%.

The top three countries for capital appreciation remained the same – the US at around 50%, Spain on around 15% and the UK on around 10%.

More than 90% of survey respondents say they plan to maintain or increase the size of their US property portfolio in 2015.

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

AFIRE Chief Executive, James A. Fetgatter, says, “For foreign investors, the allure of Washington, DC never fades,” said James A. Fetgatter, Chief Executive, AFIRE. “But unlike other cities, which currently have technology and energy drivers, DC mostly depends on the US government to keep occupancy in balance; given the current situation, Washington area real estate is the short-term, unintended victim of Federal budget tightening. On a long-term basis, Washington, as the capital city of the free world, remains a very attractive opportunity.”

By a wide margin, the US was voted the most stable and secure country for investment in the 23rd Annual Survey, 55% ahead of second-placed Germany and 60% ahead of the UK in third. Canada was fourth and Switzerland fifth.

But the influence of Chinese investment is rising quickly. Two-thirds of survey respondents expect China to become the largest source of capital into the US in 2016 and beyond and 10% expect it could happen this year. Almost three-quarters (72%) of survey respondents expect this investment to be a long-term, permanent inflow.

Thomas Arnold, Head of Americas – Real Estate Abu Dhabi Investment Authority and AFIRE Chairman, says, “As it periodically has been in the past, the United States is currently the target of much of the foreign investment in real estate globally.

“With a stable and transparent market and an economy that appears to be steadily improving without the fits and starts experienced in other regions, the US has become the first stop for foreign real estate investors. And with the continued creation of wealth in China, it is not surprising that they, along with other nationalities, are voting with their dollars.”

Investors ranked multi-family as their preferred property type in the United States, followed by industrial, office, retail, and hotel.

Two new cities, Tokyo in fourth, rising 11 places, and Madrid in fifth, up eight places, were listed among the top five global cities, replacing Houston and Los Angeles. For the second year in a row, Spain ranked as the second-best country for capital appreciation.

Brazil reclaimed its first-place spot among emerging markets, putting China into second place. Mexico and Chile took third and fourth places.

Another new entry was, Poland, which tied for fourth place among investors’ top five emerging countries.

Around 30% of respondents are most optimistic about 2015 than 2014, with almost 70% the same and a handful less optimistic.

More than half of members expect interest rates to rise in 2015, with around 35% opting for 2016.

The AFIRE 2015 Foreign Investment Survey results are:
 
 Top Five Global CitiesCountries Providing the Best Opportunity for Capital Appreciation
1New York (#2 last year)United States (#1 last year)
2London (#1 last year)Spain (#2 last year)
3San Francisco (#3 last year)United Kingdom (#3 last year, tied with China)
4Tokyo (#6 last year, tied with Madrid)China (# 3 last year, tied with the United Kingdom)
5Madrid (#6 last year, tied with Tokyo)Brazil (unranked last year)
 
 Top Five U.S. CitiesTop Five Emerging Countries
1 New York (#1 last year)Brazil (#2 last year)
2San Francisco (#2 last year)China (#1 last year)
3Houston (#3 last year)Mexico (#3 last year)
4Los Angeles (#5 last year)Chile (#6 last year, tied with Poland)
5Washington, DC (#4 last year)Poland (#6 last year, tied with Chile)
 
 Most Stable and Secure Countries for Foreign InvestmentRanking of US Property Types
1 United States (#1 last year)Multi-family (#4 last year)
2Germany (#2 last year, tied with the United Kingdom)Industrial (#1 last year)
3United Kingdom (#2 last year, tied with Germany)Office (# 2 last year)
4Canada (#4 last year)Retail (#3 last year)
5Switzerland (#5 last year)Hotel (#5 last Year)
 
Founded in 1988, AFIRE currently has nearly 200 members representing 21 countries. The survey was conducted towards the end of 2014 by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.
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