Deep-pocketed international investors rank Boston as tied for the second-most desirable U.S. region in 2022, according to a survey by the Association of Foreign Investors in Real Estate (AFIRE).
Boston and Austin, Texas ranked second in planned investment, trailing only Atlanta. AFIRE surveyed nearly 175 institutional investors from 23 countries – representing approximately $3 trillion under management – to gauge their intentions for portfolio allocation.
“Boston benefits from the continued growth of high tech businesses that drives demand for institutional quality real estate, while a high number of universities continues to deliver a young and highly educated demographic those businesses need to grow,” AFIRE CEO Gunnar Branson said in an emailed statement.
While demand is shifting to secondary and tertiary cities, Boston was the highest-ranked primary U.S. market in this year’s survey. Foreign investors said they plan to back away from exposure to many other high-cost primary U.S. markets, with Chicago, New York, San Francisco, Washington, D.C. and Los Angeles listed as the top five markets for decreased investments.
Some 25 percent of investors surveyed said they plan to increase their exposure in Boston, the third-highest ranking in the survey behind Austin and Atlanta.
Overseas developers have recently made big investments in both life science and office properties in Boston. Nan Fung Life Sciences Real Estate, the U.S. arm of a Chinese real estate firm, has paid $638 million to buy four office buildings in downtown Boston and the Seaport District for speculative lab conversions since early 2020. And a pair of South Korean investors joined the ownership of the Congress Square office complex in January in a $34 -million recapitalization.
Hines’ office-residential development at South Station broke ground in 2020 after receiving construction financing from London-based CIFF Investments and equity investment from a Dutch pension plan.
“There’s an opportunity for [international] investors to say, `Here is an attractive place to be,’ and there is a lot of value here that can be retained over time,” said Jeffrey Myers, research director for Colliers International in Boston.
