Global buyers still salivate over U.S. real estate

While Americans' own appetite for U.S. real estate is suppressed in many markets and market segments at the moment, global investors' appetite is growing for properties in the U.S., where their foreign money often can go a lot further.

U.S. real estate has risen to the top of the global property market among foreign investors, with New York City and Washington, D.C., named the top two global cities for foreign investors' real estate dollars, according to a recent survey from the Association of Foreign Investors in Real Estate.

Other cities in the top five in terms of foreign real estate investment were: London, Paris and Shanghai.

Global investors are also increasing their interest in China, according to the survey, with the gap between China and the U.S. narrowing.

According to AFIRE, a dramatic change occurred in the latest annual survey that showed a total reversal of investors' preferred U.S. property types, with every property category shifting. The top U.S. property types in order were: retail, hotels, industrial, multifamily, and office.

The top U.S. cities for foreign investment after New York and D.C., were Los Angeles, San Francisco and Seattle.

And despite the much talked about credit crunch and subprime mortgage crisis in the U.S., AFIRE says that on average, survey respondents said that slightly more than 50 percent of their real estate planned acquisitions in 2008 will be allocated to the U.S. That percentage is roughly the same as in 2007, but the dollar amount is expected to increase by 16 percent.

While it seems the weakening U.S. dollar has been timed with the uptick in foreign interest, 85 percent of AFIRE's survey respondents said that recent fluctuations in the dollar have not prompted them to increase their U.S. allocation.

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