Washington’s allure among foreign investors fades


The Marriott Marquis hotel, next to the Convention Center, was built with funds from the government of Abu Dhabi. (Photo by Jeffrey MacMillan)

The Washington-area real estate market became the darling of global real estate investors in recent years.

Money from countries around the world poured into local projects and developments, including from Korea, China, Germany and Saudi Arabia.

Some of the District’s biggest projects, including CityCenter, the Marriott Marquis convention center hotel and the Southwest Waterfront are being built with majority investments of foreign capital. Last week, two Korean investors, the Korean Exchange Bank and Samsung Life Insurance, completed a $255 million refinancing of a Southwest office building, Portals III. 

Many of these investments were made on the heels of Washington’s rating in recent years as one of the most attractive places to invest in the world. But even though the Association of Foreign Investors in Real Estate (AFIRE) plans to hold its annual membership meeting here in September, the nation’s capital is no longer on the top of the heap when it comes to foreign investment, according to the group’s own surveys.

AFIRE annually surveys real estate investors about the best places to invest and a look at the survey data from recent years shows Washington is not what it was. For instance, among cities worldwide the U.S. ranked second in 2009, behind only London.

Since then it has fallen back to the pack considerably:


(Courtesy AFIRE)

When compared with U.S. cities, Washington was ranked No. 1 in 2009, and then second in 2010 and 2011. Since then it’s fallen behind even Houston in the eyes of respondents:


(Courtesy AFIRE)

Why the drop off? The U.S. remains the most stable and secure place for global real estate globally, to the point that investors have begun to look past just the big-name coastal cities which they are most familiar.

“Our members’ increasing interest in cities beyond the powerhouses of New York, Washington and San Francisco points to the recognition of additional investment opportunities for foreign investors,”  James A. Fetgatter, AFIRE chief executive, said when he announced the survey results in January.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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Jonathan O'Connell · July 9, 2014