with a common interest in preserving and promoting investment in cross-border real estate.
This posting introduces AFIRE's annual survey regarding its member's attitude on commercial real estate investments in 2009.
Here is summary of the survey:
- AFIRE members collectively owns $1 trillion of real estate asset globally and $371 billion in USA.
- Because of commercial real estate bubble bubble burst, the members willingness for investment is very high.
- Foreign real estate lenders say they plan to increase lending by 54% globally and
by 58% in the U.S.
- Equity investors plan to increase investment activity by 40% globally and by 73% in the U.S.
The Top Global City for Foreign Investors’ Real estate Dollars
1. Washington, D.C
3. New York City
6. San Francisco
7. Los Angeles
The Country with The Best Opportunity for Capital Appreciation
1. USA (37%)
2. Brazil (16%)
The Country with the Most Stable and Secure Real Estate Investments
1. US (53%)
2. Germany (11.3%)
2. Switzerland (11.3%)
4. Australia (4.8%)
5. Canada (4.8%)
US REAL ESTATE TREND
- In terms of both stability and appreciation potential, the expectation for US commercial real estate is very high.
- Among members, they already invested 45% their portfolio in US properties.
- Regarding type of commercial property, preference is in the order of office, apartment, industory, retail and hotels.
- Survey respondents also indicated that finding attractive U.S. investment properties is becoming less difficult. Fewer than 20 percent of respondents said it was “very difficult” to find attractive U.S. investment opportunities. This is the lowest percentage holding this opinion in the last five years. As a comparison, in 2004, 59.4 percent of respondents said opportunities were “very difficult” to find.
- When asked to what extent a building’s “green” attributes influenced their decision to purchase a property, 11 percent said “significantly so,” and 60 percent said “somewhat so.”
Generally speaking, commercial real estate value should be determined by the Net Income or Cap Rate. However, over last few years, due to speculation and loose lending standard, investors paid premium on commercial properties, often paying "rehabbed" proforma based price. However, as lending guideline has tightened, determination of commercial real estate value are going back to Net Income approach. Therefore, for those investors who have cash and credit, I agree that year 2009 offers great opportunity for long-term cash flow based holdings. As commercial real estate rent and occupancy are declining rapidly, I think it is important to purchase assuming worsened rent and occupancy.
On the last note, Austin Tx, my key investment location, was ranked No. 11th in US city,
Report: Austin continues to be attractive to foreign real estate investors