Along with its standing as a top market for domestic real estate investors, Austin is also considered a top market for foreign investors in 2021.
A recent survey by the Association of Foreign Investors in Real Estate (AFIRE) ranked Austin as the most attractive market in the U.S. from a global perspective. The survey found that 30% of all respondents cited Austin as a top three market for planned investment this year. That put Austin in a tie with Boston atop the rankings, narrowly edging out Dallas at 29%. Rounding out the top five were Atlanta and New York City, at 25% and 21% respectively. The survey gathered insights from 101 respondents across 19 countries.
Some 33% of all respondents said Austin would be a top three market for them in the next three to five years, more than any other market. Boston and Dallas tied for second at 24%, with Los Angeles landing fourth at 21%.
Meanwhile, 23% of the investor respondents identified Austin as their No. 1 target market. The next closest city was Atlanta, which 11% of investors ranked No. 1.
Austin’s top ranking on this list is unprecedented, according to AFIRE, as a tertiary city has never ranked No. 1 before.
Overall, 90% of respondents said they plan to increase their position in U.S. cities over the next three to five years. Of the markets foreign investors plan to leave, New York, Chicago and San Francisco top the list. Houston was also in the top five.
Where will they invest?
Multifamily and industrial property will be the biggest targets for foreign investors over the next three to five years. Some 86% of investors plan to increase their position in multifamily while 79% plan to increase their position in industrial. While 3% of investors plan to decrease their position in multifamily, no investors plan to do the same in industrial.
Interest for office and retail property has cooled, but hotels are gaining interest. Some 25% of investors said they plan to increase their position in hotels in 2021, up from 16% in 2020.
Value-add properties are set to see the most foreign interest over the next few years. Some 59% of investors plan to increase their position in these assets. Core properties also remain a prominent investment strategy, accounting for half of all foreign portfolios. However, core investing has been steadily shrinking, according to AFIRE. In 2019, respondents described their portfolio as 60% core. In 2020, it was 56%. This year, it’s down to 51%. As 15% of respondents report an intention to decrease their core portfolio, this is likely a trend that will continue.
Investors from Asia, Europe and Canada are expected to make the biggest splashes within the U.S. real estate market over the next few years. Some 71% of Asian investors, 69% of European investors and 62% of Canadian investors are expected to increase their positions.
One recent example of foreign investment in Austin was Singapore-based real estate investment firm CapitaLand announcing in December plans to develop a 341-unit multifamily property near The Domain. It will be CapitaLand’s first project in the Texas capital and part of a wider $300 million joint venture with an undisclosed partner.
Austin Business Journal – May 11th 2021
