Real Estate Still Seen As Safe Bet

NEW YORK -- Foreign investors in real estate expect to spend much more in 2009 than they did in 2008, according to an annual report tracking institutional investor interest.

Both foreign lenders and equity investors plan to increase investment globally and in the United States, their favored international investment target, report members of the Association of Foreign Investors in Real Estate.

Lenders expect to boost investment by 54 percent globally and by 58 percent in the United States, while equity investors see increases of 40 percent globally and 73 percent in the United States.

The United States has more appeal this year, even after the economic tumult of 2008 and despite the painful impact of the global credit crunch on commercial real estate, said Jim Fetgatter, AFIRE's chief executive.

"If you are going to be an international investor, you'll want a significant part of your portfolio in the largest market," Fetgatter said.

U.S. commercial property sales were down 73 percent to $139.43 billion in 2008 compared with 2007, according to research firm Real Capital Analytics. The shares of U.S. real estate investment trusts, or REITs, are off about 62 percent from their highs in February 2007, as measured by the benchmark MSCI US REIT Index.