A RECENT survey of overseas investors in United States real estate shows that more than 60 per cent intend to maintain or increase the size of their portfolios. The report, by the Association of Foreign Real Estate Investors (AFIRE), was based on a survey of its 100 members from 11 countries, which together own about US$15 billion in real estate across the country. The association is primarily made up of institutional or corporate investors. Hongkong and Taiwan investors are noted by the association for the secrecy in which they conduct their investment activities. Because of this, the study excludes a large percentage of the foreign property investors. Nevertheless, it is valuable as one of the few vehicles which gives an overview of the sentiments of overseas investors. In the report, investors named Washington D. C. as the most popular city for future real estate investment. The nation's capital polled almost twice as high as Atlanta, the second-ranked city. San Francisco was third, Seattle fourth, and New York a distant fifth. Washington's popularity was explained by the investors perception of the city as a stable and solid market, because of the number of law firms, lobbyists, government agencies and retail developments. The city also has strict zoning and planning codes to protect investment. However, on closer examination, the Washington D. C. market is likely to disappoint investors. The city-wide demand for housing has remained sluggish throughout the recession. Many local estate agents who were hoping that the change of US Government would galvanise the market, have realised that the new administration is staffed largely by people who already live in the city. Washington D. C. also has relatively little commercial space because of its strict height regulations. The majority of office buildings are located outside the city limits in rural Virginia and Maryland. The same is true for retail developments. Newcomers looking for housing are unlikely to be able to afford the high prices within the district's better areas, or wish to live among the widespread poverty and high crime - Washington has the nation's highest murder rate - of the inner-city areas. Despite the high inner-city crime rate, most of the city, including the suburbs of Tysons Corner and Reston, are typical of other US cities. The city has also a rapidly increasing middle class. Atlanta, the second most popular city among foreign investors, is another city where the rapid increase in economic prosperity can be partly attributed to its fast-growing middle class. Atlanta is also the site of the 1996 Olympic Games, which is likely to bring a wide range of economic benefits to the city. The San Francisco market is suffering from the same economic problems as the rest of California. But, like Seattle, the fourth choice among foreign investors in the AFIRE survey, the San Francisco market has been fuelled by the large influx of Asian investors. Seattle also receives a large amount of Asian emigrants. It is an import business and commercial centre in the economically vibrant Pacific Rim and its capital, Seattle, has a number of other advantages. Boeing and Microsoft, two of the country's most important and successful companies, are based there. Seattle is also currently one the country's most fashionable cities, with many people moving there from other states in the US. AFIRE's survey says that 50 per cent of members considered the New York market had deteriorated in the past year. But this contradicts fundamentals which show that prices of residential property are marginally climbing. While the commercial real estate sector stays weak, it is no worse than many other areas of the country, and the impending shake out in the market presents a number of opportunities to smart investors. Overall, retail development and family housing are the most popular targets for future investment. Hotels ranked last. Other findings by AFIRE show that the fastest growing sources of investment have been from the Dutch, up about 50 per cent. Japanese investment has held steady, while the British have reduced their holdings by 33 per cent from $5.2 billion in 1989 to $3.5 billion at the end of 1991. Swedish investment has grown by over 300 per cent, although, in money terms, the country does still not rate highly.