"This is an indicator of what the foreign investor is currently thinking," Jim Fetgatter, CEO of AFIRE, tells GlobeSt.com. "If you look at the results over time you can tell what the trends are and where they are going. You get an idea of what kind of cities foreign investors like."
AFIRE has 155 members from 17 countries who have $45 billion invested in US real estate." These foreign investors represent significant real estate ownership in the country," notes Kathryn Hamilton, spokesperson for AFIRE. "The survey becomes a barometer for trends in investment dollars in US real estate."
According to Fetgatter, Boston has been a perennial favorite of foreign investors for a while. It's a European-looking city, he points out, which makes these investors feel comfortable. There are also many barriers to development, which, like San Francisco, makes the city appealing because it discourages competitors from developing products too easily. The emphasis on technology is also attractive. "All the schools in that area support upstart companies," says Fetgatter.
Kees Bruggen, a member of AFIRE and COO of IBUS Management and Development, a Dutch investment and development company with holdings here, agrees. "Boston has a great overall story," he tells GlobeSt.com. "It is attractive to European investors. It has an appealing urban feel with a good mix of residential housing. It is a university town with a great pool of people and it has an interesting financial base." The Big Dig is also very appealing to foreign investors. "They think it will mean a change for Boston in the positive sense," says Bruggen.
The city's heavy ties to the financial industry also comprise its weak spot. Its market swings can be more volatile than cities with broader-based economies. But Bruggen emphasizes that Boston got pushed out of the number one spot in 1998 not because the city's appeal went down but because demand for San Francisco and New York went up.
Despite the shadow of a potential recession hovering over the economy, Bruggen is optimistic about foreign investments in US cities. "There is a niche opportunity now. The discrepancy between capitalization rates and low interest rates is good and the Euro has been coming back against the dollar. These are positive signs." Bruggen's company, IBUS, is currently eyeing two large developments in Downtown. The company owns property in Lincoln, MA.
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