Turkey’s allure rises in the U.S-dominated real estate list

ISTANBUL - Hürriyet Daily News

DAILY NEWS photo / Emrah GÜREL

The United States dominates the list of places that global commercial real estate investors would prefer to put their money this year, while Turkey has added sparkle and China lost luster, according to a survey of international investors.

Among emerging markets, Brazil once again was ranked number one and China maintained its second slot. Turkey moved up to third from last year’s seventh spot. India, which had been third, slipped to fourth to tie with Mexico, which moved up from fifth.

A major shift in Turkish code that eased asset purchases by foreigners last year attracted the attention of investors to the country. New buyers, largely from Gulf countries, have flocked to both Istanbul and coastal provinces, which are traditionally the country’s top tourism destinations. Turks also started a large urban transformation project last year that aims to rebuild at least 600,000 houses.

For the first time since 2001, four of the top five cities that investors said they favored were in the United States, according to an annual survey released by the Association of Foreign Investors in Real Estate (AFIRE) yesterday.

The survey reflected a significantly more optimistic view of the U.S. economy and property market for this year, according to Reuters. Last year, 33 percent held a pessimistic view, while this year 81 percent said they planned to increase their U.S. holdings.

As for global cities in which to invest, New York and London ranked first and second, respectively, as they did last year. But San Francisco rose to third from fifth and Houston, unranked last year, climbed to number five.

“Houston was a surprise to us,” Reuters quoted AFIRE Chief Executive James Fetgatter as saying. “San Francisco and Houston being in the top five global cities shows that this is where our people think the economy is going to revive. They believe these are places where the drivers of the economy are going to be – in energy and tech.”

Washington, D.C. slipped to number four from third, reflecting investors’ concerns about how federal budget reductions would affect employment and the demand for space in the city.

The survey of the association’s nearly 200 members was conducted in the fourth quarter of 2012 by the James A Graaskamp Center for Real Estate at the Wisconsin School of Business. AFIRE members have an estimated $2 trillion or more in real estate assets under management. Some 42 percent of the investors and 26 percent of the advisers are from the United States.

According to the AFIRE survey, the United States also held its spot as the country investors said provides the most stable and secure real estate investments. Canada, Germany, Australia and the U.K. followed in the same order as they did last year. Sweden, which was unranked in last year’s survey, tied with the U.K. for fifth place.

The United States also held its spot as the country providing the best opportunity for real estate price appreciation, grabbing 55 percent of the vote. Brazil came in at a distant second with 17 percent. The UK moved up to number three from last year’s fourth, and Turkey, which was ranked number nine last year, flew into fourth place.

China, formerly ranked third for price appreciation globally, was unranked this year, failing to receive one vote. Its cities also took a hit. Shanghai, ranked fifth last year, fell to the number 12 spot this year. Hong Kong, eighth last year, fell to number 19.

“Everybody is concerned about China’s economy slowing, and there’s a little uncertainty about the change in leadership,” Fetgatter said.

Europe also did not fare well. About 80 percent of the respondents said they believed Europe would likely be in recession this year.

Within the United States, New York remained the top choice among investors. San Francisco displaced Washington, D.C. for second, as the U.S. capital slipped to third, San Francisco’s former spot. Houston was fourth, up from seventh. Boston, last year’s fourth, fell to fifth.