Tuesday, 15 February 2011 00:00
In the recent 19th Annual Survey released by the Association of Foreign Investment in Real Estate (AFIRE), New York City took top spot over London, the previous winner, as first choice for foreign investors in 2011. Being the winner in this survey is a big deal. London has held either first or second spot in this survey since 2001. London has dropped now to third place and New York City emerged the winner. Washington was named as the second top choice of foreign investors.
It is not surprising that two U.S. cities – New York City and Washington DC – are preferred by foreign investors over other global cities. Both cities are world-class centers, hubs of finance, and places symbolizing power and prestige. Usually, the two cities rank the highest on investors' preferred lists.
In a Hotel Investors Gauge, investors, lenders, and developers were asked to rank the top markets (primary and secondary markets) in terms of investment potential. The results of this survey put Washington in top place with New York City coming in a very close second. Once again, both cities ranked on top – the standard ranking for these two major centers. New York City might lead Washington on one study or vice versa in a different survey. Yet there is no denying the popularity and potential of these cities for investors.
According to the Hotel Investors Gauge, other preferred cities for investment included San Francisco, San Jose, Miami/Fort Lauderdale, Los Angeles, and Boston. High-ranking second-tier cities were Austin, Portland, Charleston, and South Carolina. Keep in mind though that lower-ranked cities in top ten list might rate well but can score much lower than top ranking cities. For example, in the 19th Annual AFIRE Survey, Boston ranked third but second place Washington received four times as many votes.
Generally, investors favor resilient markets. If a market can bounce back from an economic downturn, such resiliency impresses investors. Actually, one reason why investors are drawn to the NYC market is its historically-sound record. Consistency, as well as a strong reputation on the national and international scene, matters to investors.
Markets in major centers can bounce back easily from economic turmoil. When markets in thriving cities regain their ground, they can proceed to move forward with relative ease. In fact, investors are even attracted to the luxury market in New York City. Although luxury real estate can suffer in a poor economy, the upscale market has a history of quick recovery at an impressive rate.
Investors must be prepared for risk but they can minimize that risk. Choosing the overall best available market – the market with historical strength - is the smart choice. Markets can excel for different reasons including being recognized as a premier niche or high-tech area.
Yet historical strength speaks volumes for a market. New York City has shown its strength over the years. Investors can relax and be confident about a market like the NYC hotel industry.