US was still a good place to put your
money. From our findings, you get the
feeling that there was a return to the
safe, tried-and-true
investment market
of the US.”
Garnering 56% of
the vote, the US was
named the most stable and secure country for investment.
FETGATTER: Germany came in
“I think on a second with 11%, up
risk/return from third place,
basis, there was while the United
the perception Kingdom fell from
that the US was second to third place
still a good with 8.8% of the
place to put vote. Australia and your money.” Japan rounded out hetopfive.
The US also
maintained its standing as the country
offering the best opportunity for capital
appreciation. On average, those surveyed related that a little more than 50%
of their planned real estate acquisitions
in 2008 would be in the US. Though the
percentage is roughly the same as the
prior year, the actual dollar amount,
according to the poll, is anticipated to
grow by 16%. Surprisingly, 85% of
respondents said the devaluation of the
dollar has not prompted them to
increase their US allocation.
Overall, participants reported plans to
increase global spending in the property
markets from approximately $1.4 billion
in 2007 to $1.7 billion this year, a hike of
more than 20%. From what Fetgatter can
ascertain, many of AFIRE’s members are
of two minds when deciding how to proceed through the credit crunch. “There is
a conflict of forces. They’re hesitant
because they are waiting to see exactly
what’s going to happen,” he relates.
“Some are waiting to see if there will be a
market correction with even greater
opportunities, but others are already seeing a decrease in competition from
domestic US investors and those that are
more highly leveraged.”
Some of the most significant changes
in this year’s survey occurred with
respect to the growth markets of Asia.
China, with 21.4% of the vote, was
acknowledged as the second best bet
for capital appreciation. The gap
between the US and China narrowed
from 27 percentage points in 2005 to
less than 5% in 2007. “I think investors
are more comfortable investing in
China because they have been doing so
for a couple of years and they are seeing more people invest with good
results. It’s a learning curve for them,”
observes Fetgatter.—Danielle Douglas
Weaker Fundamentals
Challenge CMBS Sector
It will be a challenging year for US commercial mortgage-backed securities as the
economy softens and the capital markets
face continued turmoil. However, according to a recent report by Moody’s
Investors Service, tighter underwriting
standards may balance out the expected
increase in CMBS delinquencies.
Jim Duca, group managing director at
Moody’s in New York City, says this
increase in delinquencies was somewhat
expected. The current delinquency rate
is at a historic low—roughly 0.4%—so it
has “nowhere to go but up,” he says.
“Even if they were to triple to 1.5%,
that’s roughly the historical average, so
even with some added delinquencies,
things are still in good shape.”
