July 2nd, 2013
How the World Views U.S. Real Estate
The Association of Foreign Investors in Real Estate (AFIRE) is worth watching to track the world’s opinion of U.S. real estate. Each year, AFIRE surveys its 200 members, who together own roughly $2 trillion in real estate assets around the world, to ask where they are interested in investing in the year ahead. When the results of the survey were published earlier this year, for the first time in the history of the survey, four of the top five markets of interest were located in the United States. The U.S. markets of greatest interest to global investors were New York City, San Francisco, Washington, D.C. and Houston, which made its first appearance on the list. London, the only international city in the top 5 was ranked after New York.
The good news for real estate isn’t limited to just the top cities, though. Global investors generally have a very positive attitude toward U.S. real estate investments as a whole. Eight out of ten AFIRE members plan to increase their U.S.-based real estate holdings this year, with nearly a third planning a “major net increase.” Just over half of respondents selected the U.S. as offering the best opportunity worldwide for capital appreciation. As a point of reference, the second ranked country, at 17 percent of the vote, was Brazil. You know we’re in recovery mode when our real estate market trounces an emerging market for potential price increases. The U.S. real estate market was also ranked number one globally for providing the most stable and secure investments.
So, what is the impact of all of this real estate acquisition activity on the door and window industry? Most of the direct investment that will take place by these investors will be in the areas of commercial real estate and multi-family residential real estate. Just as with single-family homes, when these types of real estate change hands, they are often refurbished following the acquisition. Unique to both commercial and multi-family real estate, versus single-family residential investment, is the motivation to upgrade a property with the primary motivation of increasing the rents that can be charged when existing leases renew. Doors and windows also benefit from a measurable and short payback period on upgrades motivated by increased energy efficiency. Thus, the next few years hold a great deal of promise for door and window manufacturers serving the commercial market segment.