Will this year be any different? Executives at AFIRE hope so--especially as the most recent survey results capture even stronger interest in US investments than last year--but are not willing to place bets on when an influx of significant capital may be expected.

"Last year foreign based transactions--as were most transactions in commercial real estate--were slower and fewer than expected," AFIRE CEO James A. Fetgatter tells GlobeSt.com.

What happened, he speculated, is that the recession was far more entrenched and long-lasting that most investors realized. Also, the discounted prices that had been widely expected never materialized.

This year's survey, which was conducted in the fourth quarter of 2009 found that 51% of respondents identify the US as providing the best opportunity for capital appreciation--compared to 37% in 2008, 26% in 2007, and 23% in 2006. In fact, the last time respondents' perceptions for US real estate was this strong was in 2003, when the percentage once again reached 51%, AFIRE noted.

Foreign investors are still interested in the US market--but are far more cautious after a year or more of pain, Fetgatter says. "They are focusing on three cities this year--New York [City], Washington, DC and London. In the emerging markets they are only looking at China. In the past, foreign investors have tended to diversify themselves across several markets, but this year they are limiting their risks, but staying with the very top markets."

Jones Lang LaSalle's John Kevill has also seen anecdotal evidence of foreign investor interest in the Washington, DC market--interest that frustratingly hasn't translated to significant investment levels to any great degree yet. That is not to say there haven't been some very big sales by foreign investors over the past several months in this city, he says. In part, though, investors are holding back because of a scarcity of the type of top quality, trophy properties that they want, he says. "What then happens when these properties do come to market is pricing turns premium very quickly," Kevill explains.It is a similar environment in New York City, at least in terms of foreign interest, Carl Schwartz, chair of the commercial real estate practice group at Manhattan-based law firm Herrick, Feinstein, tells GlobeSt.com. "There aren't that many significant trades happening in New York [City], but those that are have a foreign flavor to them," he says, pointing to Korean investors buying the AIG Building and Israeli-based buyers acquiring the HSBC Building.

"Our firm is getting inquiries on a regular basis from China and from people who purport to represent money from all over Europe and Asia," he says. "Our practice is New York-centric, but because we do some work in the other major domestic markets we're also getting a high volume of calls about [DC], Los Angeles, Chicago and other top-tier markets."

The foreign money senses that there's still trouble ahead of US commercial real estate, and they're looking to buy where they perceive value, Schwartz says. "It's interesting to note that foreigners' interest in American real estate is running ahead of domestic investors' interest in those properties. And there's very little talk right now of American investors looking abroad. So, of the activity and talk, much of it centers on foreign investors looking at the major markets here."

Other findings from the survey:

• Two thirds of respondents plan to increase their investment in theUS in 2010 compared to 2009;
• Investors say they plan to increase US allocations above 2009levels by 62% for equity and 83% for debt; at least half the survey respondents report a stronger appetite for both debt and equity investments in the US than in other countries;
• Plans for global equity investment in 2010 exceed plans for 2009 by46%; 2010 plans for global debt are 20% lower than planned for 2009;
• By the middle of the fourth quarter of 2009, foreign investorsplaced only 62% of planned debt allocations and 43% of planned equity allocations globally; in the US they placed only 35% of planned debt allocations and 23% of planned equity allocations;
• As a portion of global real estate, US 2010 allocations for debtrepresent 80% of the global pool; allocations for equity represent 49%;
• Boston made a significant climb into fourth place and Los Angelesfell one spot into fifth place;
• Survey respondents expressed a firm interest in multi-family astheir preferred property type followed by office, industrial, retail and hotel properties--the second year in a row in which multi-family topped investors' product preference;
• Half the respondents say they expect the recovery by or before thefourth quarter of 2010;
• 33% of survey respondents say they are more optimistic about theUS real estate market than they were in June 2009.