It's no surprise that the US leads the target-investment roster for 2007, with 46% of our Feedback Poll-takers checking off homeland buys as their preference. Asia came in second--but a distant second--at 16%, and this poll was taken just as news was spreading that the Chinese government plans to hinder foreign investment flows. Runners-up in the poll, in descending order of interest, were Mexico, Europe and Canada. Commentator Bob Bach says that while respondents might be giving Europe short shrift, they're otherwise spot on. Let him explain:

"International capital will go to all of those markets, and capital from all those markets will be coming to the US. There's just a lot of capital flying around the globe right now in all directions as investors seek diversification, yield and upside growth potential. There is a worldwide shortage of investment-worthy product, and that has prompted investors to look everywhere. "If I had to rank, I would put Europe first, Asia second, Mexico third and Canada fourth. Europe is huge, with a range of investment choices from institutional, mostly in Western Europe, to opportunistic in the former Soviet states and the Baltic region. Those are more difficult markets to invest in, and less developed, but for opportunity capital they present some good locations. Additional European opportunities will be created through the introduction of REITs in the UK and Germany in 2007 and a growing willingness of corporations to shed at least some of their owned real estate.

"Growth is robust in Asia, but the culture and business climate are a little less transparent and familiar to Americans. I don't know what the investment limits will do, but a lot of companies are making plans to invest in China. ProLogis is in the market, and I believe Morgan Stanley is as well, looking for opportunities in general. China may be imposing limits, but India has just relaxed its foreign-ownership standards. That makes a large amount of institutional-quality real estate available for outside investors in that country.

"Mexico still attracts a lot of manufacturers, but the bloom is off the rose, so I'll put them third. The manufacturers that would have gone to Mexico, maybe five years ago, are more inclined to look at China today. Canada is a relatively small country, almost an extension of the US market, but arguably it has better economic prospects.

"But there's an interesting book, called The Flight of the Creative Class" by Richard Florida, that postulates that future growth opportunities will come from places like Canada, Australia and Ireland, markets that are more open culturally and socially. That's where the thought leadership, high-tech companies and creative workers will want to live, and migration patterns might shift from the US to these other markets. We're taking a second look at our immigration policies, and increasingly immigrants may not feel as welcome here as they did previously. In other words, those cities and regions will be more competitive with the US going forward."