Reporting from MIPIM 2011 Day 2:
In a recent survey of foreign property investors, the U.S. ranked some 50 percentage points higher than its closest competition in providing the greatest opportunities for capital appreciation and 20 points higher offering the most stable and secure property investments in the world.
The robust property markets in New York and Washington are considered signs of recovery of the real estate market. However, data from CRE showed that the vacancy rates for office, retail and multi-family are still at historic highs. Multi-family rents have started to improve while rents for most other commercial properties still soft. There was a nice spike in the real estate transaction at the end of year 2010, but the market is still weak in terms of price and volume. Property prices in New York and Washington were driven up by risk-averse capital investment in trophy properties, and the prices for most other properties are unchanged. Distressed assets continued to be drag for the market. The retail sector offers some opportunities with more bankruptcies and consolidations still to go. Unemployment and political factors represent macro risks for the real estate market.
Secondary markets in the U.S. are considered the next targets with huge potential and opportunities.
This is a topic of particular relevance to the Graaskamp Center and Prof. François Ortalo-Magné who leads an annual survey of the members of AFIRE, the Association of Foreign Investors in Real Estate. The survey, results of which were released in January, revealed that the U.S. real estate market offers a stronger investment opportunity for foreign real estate investors’ money than it has in the last 10 years. Interestingly, there is typically a fairly even distribution of votes among the top U.S. cities for foreign investment. However, in this year’s survey, New York and Washington scored almost four times higher than third place Boston. Click here to read the full story and the detailed survey results.