Boston is among the top 5 cities in the U.S. for foreign real estate investment, according to a new study from the Association of Foreign Investors in Real Estate (AFIRE).
Based on AFIRE member responses, Boston is the No. 3 U.S. market in 2017, up from No. 5 a year ago. Here is AFIRE’s top five:
- New York (No. 1 last year)
- Los Angeles (No. 2 last year)
- Boston (No. 5 tied with Seattle last year)
- Seattle (No. 5 tied with Boston last year)
- San Francisco (No. 3 last year)
AFIRE members are among the largest international institutional real estate investors in the world, and have an estimated $2 trillion-plus in real estate assets under management.
It is important to note that AFIRE members are not homebuyers – the top five property types in the U.S., per the survey, are industrial, multifamily, office, retail and hotel – but such investments undoubtedly benefit an area’s residential market, and furthermore, Greater Boston is no stranger to foreign homebuyers.
Foreign demand for real estate on the decline?
More than 50 percent of AFIRE’s members said that Brexit would have a positive effect on the U.S.’ real estate market, but very few members are optimistic about the overall U.S. market. Only 6 percent of members expressed optimism, while 33 percent are pessimistic.
James A. Fetgatter, the chief executive officer of AFIRE, cited recent developments for investor caution.
“As uncertainty rises with a new government in Washington and interest rates that have risen dramatically, it is no surprise that investors have signaled a note of caution,” Fetgatter said. “Comfortable spreads between cap rates and interest rates have narrowed, making the investment criteria more selective and difficult. Increased market research and discipline will be required.”