"Boston Emerges as a Top Target for Foreign Real Estate Investors"


Author: Catherine Carlock

Date: January 6, 2016

Boston is among the top U.S. cities for foreign real estate investors, according to a recent survey from the Association of Foreign Investors in Real Estate.

Boston and Seattle tied for fifth place among U.S. cities, behind New York, Los Angeles, San Francisco and Washington, D.C. The survey was a poll among AFIRE’s 200 member firms — both foreign investors and investment advisory firms — and was completed in the fourth quarter by the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business.

While Boston has attracted significant foreign investment in the past two years, AFIRE members had not ranked Boston as among the top five U.S. cities for foreign real estate investment for the past three years, the survey shows.

James Fetgatter, AFIRE’s CEO, said in an interview that while Boston missed the top-five mark in the past few years, the city is a perennial favorite for foreign investors.

“It’s got all the things that they like,” he said. “Its barrier to entry is very high. It has a vibrant urban core. It’s got the educational institutions. And for the Europeans, it looks like a European city. ... That’s a subtle thing, but certainly for the Germans and the other European investors, it’s a city that they can feel comfortable in.”

Fetgatter said AFIRE members such as Jamestown Properties of Cologne, Germany, and Skanksa of Stockholm, Sweden, are heavily invested in the Seaport District — Jamestown with the overhaul of the Innovation and Design Building and Skanska with its multiple Seaport Square office projects. Another AFIRE member, Union Investment Real Estate of Hamburg, Germany, recently acquired The Godfrey Hotel in Downtown Crossing for $174 million and is alsoslated to acquire Converse’s new Lovejoy Wharf headquarters for $150 million.

AFIRE also ranked the top five cities globally among investors, in which New York ranked first, followed by London, Los Angeles, Berlin and San Francisco. The U.S. ranked as the most stable and secure country for foreign investment, followed by Germany, the United Kingdom, Canada and Australia.

Fetgatter said that Boston’s top-five ranking among U.S. cities signals a mounting interest among foreign investors in Boston’s real estate market.

“It will mean that not only have they perhaps been looking there currently, but probably for 2016 you’ll have a lot of interest,” Fetgatter said.

Catherine Carlock covers Greater Boston's commercial real estate industry.