10 Cities Investors Will be Targeting in 2009

There's a lot of talk in the industry that when it comes to real estate, things are beginning to turn around. A lot of properties in the higher end of the market are beginning to sell as buyers other than first home owners make their way back into buy and sell mode. Although suburb by suburb the impact of the economy varies greatly, there are always those key cities that investors target. They too vary from time to tome, but similarly to the top ten places people love to live, they don't change to any great extent.

According to the Association of Foreign Investors in Real Estate (a research association that tracks where member investors are finding the best opportunities around the world) the latest list of the world's best real estate buys has emerged. The AFIRE surveys its 200 members, who collectively hold US $700 billion in cross-border real estate, to come up with the list. It's not a massive group I admit, but that is a pretty large dollar figure so I'm prepared to take on board what they have to say.

Drum roll please, and get your passport ready...according to this highly affluent group, the countdown of the top 10 cities that investors will be targeting in 2009 are as follows:

10. Singapore Singapore jumped in rank from 24th to 6th between 2006 and 2007 but the city with the world's biggest port is likely to suffer when the global economy does, and that's what's happened. Worldwide the shipping and supporting sectors of office and commercial space have slipped but the city is still seen as a strategic link in Asia Pacific with a good chance of rebounding.

9. Houston Despite commercial rents decreasing across America, Houston, Texas' market has actually improved. Most US cities peaked in 2007 and 2008 but then the economic downturn returned prices to 2006 levels. In Houston's case, and specifically in the office market, prices increased a massive 36% according to Newmark Knight Frank (a UK property investment firm). The city continues to attract new residents and Texas' low business costs make it an attractive place for corporate relocations, which require real estate.

8. Paris Paris commercial properties have one of the lowest vacancy rates on the continent at 5%, and according to Knight Frank, residential prices were up 2.8% last year. Although prices are expected to flatten and perhaps dip, it does not look like a market primed for the same sort of collapse that has been seen in other countries around the globe. And who wouldn't want a property in Paris, really?

7. Including this city seems like a bit of a bad joke considering LA is one of America's hardest hit subprime areas. Despite having one of the nation's highest foreclosure rates, destroyed property values and flatlining consumer spending, there as bee n a recent flurry of transaction volume in the residential sector with sales surging 102% which hints at a market that has hit the bottom already.

6. San Francisco Now is apparently the time to leave more than just your heart there. Residential prices in San Fran's metro area have falled by 25% in year over year terms according to the National Association of Realtors. On the commercial side, technical and financial service firms have been downsizing their operations but that comes in a year when 7 million square feet of new office space is projected to come onto the market. When considered together, these factors make 2009 a buyer's market.

5. Shanghai According to the Deutsche Bank, China is poised for its worst deflation in a decade, which makes Shanghai an attractive option for gettign discounted properties in a market that overheated in the last decade. Unless you believe China won't be important by the time the global economy bounces back, it's difficult to bet against a blue chip like Shanghai.

4. Tokyo After Japan's "lost decade" of the 1990s (a result of a speculative real estate bubble), Japanese investors largely avoided buying and issuing the subprime products flowing through American and European institutions. Since there are fewer unknowns in the property market, that makes Tokyo a safer bet when it comes to determining reasonable valuations.

3. New York City The New York residential market is usually considered almost bulletproof, but has recently started to see a downturn in prices. So much so in fact that organised property bargain hutning tours to even premium areas of the city have been organised out of China.

2. London Prices for homes and commercial properties in central London continue to decline, but even as England sits firmly in a recession, London is a market where investors feel safe making long-term plays and believe they can get reasonable discounts on price.

1. Washington D.C. Commercial and residential real estate both need low unemployment and strong job growth, and currently Washington, D.C. has the lowest unemployment rate in the United States. President Obama's stimulus package also means it's unlikely that government jobs and those that they support, will be leaving DC any time soon.

Posted by Charles Tarbey on 30/03/2009 at 9:23 AM | Categories:


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