Top Cities for Foreign Investors

The survey was conducted in the fourth quarter 2007 among the association’s nearly 200 members. Collectively, AFIRE members hold $700 billion of crossborder real estate, including $230 billion in the U.S.
The survey was conducted by The James A. Graaskamp Center for Real Estate, University of Wisconsin – Madison. “The ascension of NY and Washington, DC as the two top global cities (with London tied for second place) represents a very strong showing for U.S. real estate,” said Karin Shewer, principal, Real Estate Capital Partners, and the new chairman of AFIRE.

“One of the significant findings that cannot be overlooked is the jump in investors’ confidence in
China,” added James A. Fetgatter, chief executive, AFIRE. “For the second time in three years,
China has been voted as the country offering the second best chance for capital appreciation
after the U.S. Even more significant is that the gap between the U.S. and China has narrowed
from 27 percentage points in 2005 to fewer than five percentage points in 2007. In addition, five
of the respondents’ top ten global cities are in Asia.”

GLOBAL SNAPSHOT
Top Five Global Cities for Foreign Investor’s Real Estate Dollars
1. New York; up from #2 in 2006
2. Washington, DC; up from #4 in 2006
2. London; down from #1 in 2006
4. Paris; down from #3 in 2006
5. Shanghai; up from #9 in 2006

Other significant changes:
Singapore, up to 6th place (tied with Tokyo) from 24th place in 2006
Sydney, up to 9th place from 15th place in 2006
Hong Kong, up to 10th place from 11th place in 2006

Most Stable and Secure Countries for Real Estate Investments
1. U.S. – 56% of vote
2. Germany – 11% of vote; up from #3, with 4.5% of the vote in 2006
3. United Kingdom – 8.8% of vote; down from #2, with 11% of the vote in 2006
4. Australia – 8.8% of vote; up from #5, with 3% of the vote in 2006
5. Japan – 5.3% of vote; with 3% of the vote [tied with Australia], unchanged from 2006

Countries Offering the Best Opportunity for Capital Appreciation
1. U.S. – maintains ranking; increases percentage of votes to 26.2% from 23% in 2006
2. China – moves into 2nd place from 3rd; increases percentage of votes to 21.4% from
14.8% in 2006
3. India – falls from 2nd to 3rd; decreases percentage of votes from 18% to 16.7% in
2006.
4. Russia – moves from 5th to 4th; although percentage of votes decreases to 7.1% from
8.2% in 2006
4. Mexico – moves from 7th to 4th (tied with Russia); increases percentage of votes to
7.1% from 4.9% in 2006

U.S. SNAPSHOT
Top U.S. Property Types
Within the U.S. property market, very little changes among investors’ property preferences. Office
buildings retain their lead among foreign investors. Multi-family properties remain in second place
while industrial properties move into third place and hotel properties fall into fourth. Retail
properties remain in fifth place.
1. Office – retains 1st place in 2007
2. Multi-family – retains 2nd place in 2007
3. Industrial – attains 3rd place from 4th place in 2006
4. Hotel – drops into 4th place from 3rd place in 2006
5. Retail – remains in 5th place.

Top U.S. Cities
The ranking of the top five U.S. cities echoed respondents’ choices in 2006:
1. New York
2. Washington, DC
3. Los Angeles
4. San Francisco
5. Seattle
Climbing up the ladder: Las Vegas from 16th place to 8th

Appetite and Opportunity: U.S.
The resilience of the U.S. real estate market among seasoned international investors is
underscored by the timing of the survey, conducted during the fourth quarter of 2007, after the
much-publicized credit crunch and sub-prime mortgage crisis. In spite of this news:

On average, survey respondents say that slightly more than 50% of their real estate
planned acquisitions in 2008 will be allocated to the U.S. While the percentage
allocated to the U.S. remains roughly the same as 2007, the actual dollar amount is
expected to increase by 16%.

Eighty-five percent of survey respondents say that recent fluctuations in the dollar
have not prompted them to increase their U.S. allocation.

The percentage of respondents saying it was “very difficult” to find attractive U.S. real
estate fell to 22.8% from 37.5% in 2006. This represents the smallest percentage
expressing this sentiment since 2003.

For the first time since 2004, a measurable number of investors declared investing in
the U.S. to be “somewhat easy.”

For the first time in years “distressed assets” are mentioned by AFIRE members as a
new strategic focus.

Appetite and Opportunity: Global
While U.S. real estate continues to hold sway over real estate in other countries, its dominance is
being challenged by other global opportunities.

On average, survey respondents say they plan to increase global spending on real estate
from $1.394 billion in 2007 to $1.692 billion in 2008, an increase of more than 20%
(compared to a 16% increase in planned U.S. acquisitions).

WHAT IS AFIRE?
AFIRE members have a common interest in preserving and promoting investment in cross-border
real estate. Founded in 1988, AFIRE currently has nearly 200 members representing 21
countries. AFIRE is located at 1300 Pennsylvania Avenue, NW, Washington, DC; (202) 312-
1400. www.afire.org