Research Worldwide believes countries today that are dependant on foreign direct investment (FDI) to sustain economic lifeblood and contribute substantially to their gross capital formation, should remain as foreign investor friendly as possible.
It might be noted that for the most part, developing countries require FDI net inflows to contribute at least 10 percent toward their gross capital formation or gross domestic investment. Developed countries such as the U.S., the U.K., France, Germany, Japan, Canada, Finland, Spain, and the Netherlands see sizeable inflows and outflows of FDI as some 64,000 transnational corporations worldwide select where to invest globally for the best long term results.
For example, consider these little tidbits: The Czech Republic is highly dependent on receiving some $3.8 billion annually in FDI net inflows, which constitutes almost 48 percent of its gross capital formation. Ireland averages $9.3 billion a year in FDI net inflows, and depends on this investment for almost 40 percent of its gross capital formation needs while two island states, Singapore and Hong Kong, both require 34 percent of FDI net inflows to finance their gross capital formations.
Of course, the developed older European countries such as Finland and Sweden require net inflows of FDI to finance some 30 percent of their gross capital formation. These developed European countries are also sizeable exporters of FDI and have well entrenched open international trading and investment policies.
Turning to the the U.K., France, Japan, Switzerland, the Netherlands, Germany, and Spain, these have seen sizeable net outflows of FDI over the last 10 years and on average, the U.K. has seen a net outflow of $42 billion a year in FDI during the 1994-2003 period, according to the Organization for Economic Cooperation and Development. (OECD). These countries' traditional role as providers of net foreign direct investment to the rest of the world was greatly strengthened in 2003, reaching $192 billion after averaging $41 billion annually in 2001 and 2002, says Research Worldwide.
Commercial real estate tends to benefit a great deal from this inflow of FDI as gross capital formation includes fixed assets such as land improvement, offices, commercial and industrial buildings, private residential buildings, schools, and hospitals. In fact if you look at geographical allocations of foreign investors' global real estate portfolios in 2002, 38 percent were in the U.S., 33 percent in Western Europe, 13 percent in the U.K., and six percent in other countries.
That being said, the best global cities for real estate investment are Washington, D.C., London, Paris, New York City, and Los Angeles.
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