The Association for International Real Estate Investors (AFIRE) released its latest report on international investment in U.S. real estate.

AFIRE found Austin, Boston, and Dallas as the top U.S. cities for planned investment in 2021. Notably, this is the first time that Austin has topped this list, coming in 10th last year.

“In 30 years of AFIRE surveys, no tertiary city has ever placed in the top three. Austin’s ranking at the top of the list in 2021, therefore, signals a significant shift in strategy towards secondary and tertiary markets,” the report says.

The shift in focus from investors towards expanding their real estate exposure in smaller U.S. cities is motivated by asset quality, portfolio diversification, and income return. The variety of assets offered and ease of doing business in the U.S. are also driving the demand.

Other statistics from the 2021 AFIRE International Investor Survey include:

  • More than six in 10 respondents said they expect to increase their investment in tertiary cities, eight in 10 in secondary cities, and three in four in primary markets in the next three to five years. 
  • U.S. investment allocation by international investors is forecasted to increase 71% over that time, which is only 8% less than U.S. investors. 
  • Multifamily property remains the most popular property type, with 86% of respondents stating they intend to increase their multifamily investment exposure over the next three to five years, followed by industrial at 79%. 
  • Planned investments in hotel properties are trending upward to 25% compared to 16% the previous year. 

AFIRE sees foreign investment in the U.S. as a positive trend and reflecting optimism towards pandemic recovery. Read the full report here.