The United States will remain the top choice of most global commercial real estate investors in 2012. While the United States offers the most stable and secure option for commercial real estate investment, investors say that improvements in rent and occupancy growth, as well as the repeal of a 1980 foreign investment tax have had the strongest impact on their investment decisions, according to the 20th annual survey of Association of Foreign Investors in Real Estate (AFIRE) members.
For the past year, investors in U.S. commercial real estate have focused on gateway cities such as New York, Washington, Boston, San Francisco and Los Angeles, and such activity has had the effect of driving prices up and yields down in those cities.
The United States is still very desirable, and was second behind the UK in attracting cross border investment in 2011, according to Real Capital Analytics preliminary figures.
60% of respondents said they plan to increase their investment in U.S. real estate in 2012, while 42.2% said they believed the United States in 2012 offers the best opportunity to see increases in the value of their commercial real estate investments.
Europe's sovereign debt problems and looming recession eliminated most of the countries there (except for Switzerland and Poland) from the radar of real estate investors. Germany lost about half its support among respondents in terms of stability and price appreciation. Accordingly, survey respondents said they would invest more in U.S. commercial property if the fundamentals of rent and occupancy growth were stronger than in their own countries.
As for the types of U.S. commercial real estate that investors favor, respondents said that this year they would most likely invest in apartment buildings, the fourth consecutive year that multifamily real estate has topped the list. Of all the types of U.S. commercial real estate, the multifamily sector has not only recovered from the post-2007 real estate slump, but rents and occupancy are even stronger than pre=recession.
Warehouse and distribution centers ranked second, up from No. 5 last year. Office properties were third, up a notch from No. 4. Retail properties - shopping centers and malls - slipped to No. 4 from No. 2. Hotels ranked No. 5, down from No. 3 last year.
The survey was conducted in the fourth quarter by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.

