Foreign investors’ interest in Seattle real estate ratchets up

Seattle is back on the list of the top five U.S. cities for foreign commercial real estate investment, according to a new survey.

This means that domestic investors will face stiffer competition buying properties in the Puget Sound region. Survey respondents said they’re most interested in buying apartment buildings and industrial properties.

The Association of Foreign Investors in Real Estate (AFIRE) on Monday released its 24th annual survey of members, and Seattle tied with Boston for fifth place. It’s only the second time Seattle has made the top five, and the first time since 2006. Seattle ranked eighth last year.

Washington, D.C.-based AFIRE has nearly 200 members representing 21 countries. The group says its members are among the largest international institutional real estate investors in the world with an estimated $2 trillion or more in real estate assets under management globally.

In Seattle, investments by Asian investors have drawn attention, with a Hong Kong-based private equity fund, Gaw Capital Partners, last year acquiring the region’s tallest skyscraper, Columbia Center, for $711 million. But investors from other areas also are investing in Seattle as evidenced by a German firm, Union Investment, which last month paid $299 million for two Amazon-occupied buildings in South Lake Union.

A Union Investment executive, Martin Bruhl, said Seattle is an attractive place to invest because it’s one of the nation’s fastest-growing cities and attractive to young, well-educated people.

James A. Fetgatter, chief of Washington, D.C.-based AFIRE said it’s the United States itself that is the investment opportunity. The real estate fundamentals are sound, and the economy continues to remain strong, both in gateway and secondary cities, he said.

Sixty percent of survey respondents said the U.S. was the country providing the most stable and secure real estate investments. Germany, which came in second, had only 19 percent of the vote in this category.

In addition, 46 percent of respondents said the U.S. was the country with the best opportunity for capital appreciation.

Respondents said that in the U.S., multifamily and industrial properties tied for first place as the preferred investment type. Retail was third, office fourth and hotels fifth.

Globally, New York City and London were ranked No. 1 and 2, respectively, in the survey. They were followed by Los Angeles, Berlin and San Francisco.

In the U.S., New York, Los Angeles, San Francisco and Washington, D.C., ranked respectively ahead of Seattle and Boston.

The James A. Graaskamp Center for Real Estate at the Wisconsin School of Business conducted the survey during the fourth quarter.

Marc Stiles covers real estate for the Puget Sound Business Journal.

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