The Association of Foreign Investors in Real Estate, a nonprofit research association, tracks where its 200 member investors are finding the best opportunities around the world. Its annual poll puts New York and London top, followed by Washington and Paris.
AFIRE members collectively hold $700 billion of cross-border real estate and while these investors' primary holdings are in commercial real estate, residential, retail and industrial properties are also considered.
'In times of global economic uncertainty, investors flock to markets that have proved stable in the long term,' a spokesman said.
It also highlights areas that have been largely unaffected by inflation and the subprime crisis, for example Tokyo, that are attracting investors' attention. Japan is one of the few countries to have inflation at 1%, and its local banks have stayed healthier than Western banks for largely avoiding toxic mortgage-backed securities.
It also shows that Asia is popular in terms of large-scale real estate investment. Investment here is mostly in office space. This sector in Shanghai is getting a lot of foreign investment. The fact that the International Monetary Fund forecasts a 9% rise in Chinese gross domestic product over the next year means more companies will have more money to spend on office space. For investors, that means taking money out of residential properties and moving it into office buildings.
Asia is also regarded as less risky than emerging markets in East Europe. AFIRE has detected money moving out of East Europe due to a general lack of transparency, ownership and title issues.
'For the moment, investors don't feel they're getting a good return for the risk they're taking on. Lots of people believe that there is a compression of yields around the world in some of these emerging countries,' said Jim Fetgatter, chief executive of AFIRE. 'You're better off going to one of the well-established, transparent markets than some other place that has a lot of risk, where you're not being compensated for that risk,' he added.
