Foreign investors remain committed to real estate opportunities in the US, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE). But as commercial real estate continues to show record deterioration, investor actions, in reality, still show a preference to high-yield bonds. AFIRE conducted the survey in Q409 among its nearly 200 members. Respondents own more than $842bn of global real estate, including $304bn in the US. In the survey, 51% of respondents said the US provides the best opportunity for capital appreciation, an increase from 37% in 2008, 26% in 2007 and 23% in 2006. It’s the highest positive perception for US real estate since the same number in 2003. “Although foreign investors expressed every intent to resume investing in 2009, like everyone else, their plans were sidelined by a paralyzed marketplace with no precedent and limited investment opportunities,” said Werner Sohier, AFIRE chairman. “However, new money is becoming available and the AFIRE survey points to an increased focus and interest in a few select markets for 2010, especially London and in the US, where prospects appear to be brightening.” The UK emerged as the second-best country for capital appreciation among 30% of respondent’s votes, and China came in third with 10%. Record-high delinquencies in commercial mortgage-backed securities (CMBS) are souring the sector’s potential. The mortgage data-provider Trepp reported a 6% delinquency rate among CMBS loans, and the rating agency Fitch forecasts the delinquencies would double by the end of 2012. But in the UK, which came in second in the AFIRE survey, commercial real estate showed a 3.6% return on investments after the first month – if the capital growth is maintained at 3%, according to the monthly IPD UK monthly property index report for December 2009, which measures total returns to directly held standing property investments. Despite the sentiment in real estate investment, investors have a stronger appetite for high-yield debt. According to an article in the Wall Street Journal, the owners of private equity-backed businesses are paid through new bond issues, and last week, companies raised a record $11.7bn in the high-yield bond market. Another survey of fund managers conducted by Bank of AmericaMerrill Lynch (BAC) showed that investors are taking above average risk for the first time since January 2006, a sign that cash is finding its way back into the market. "This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs," said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research. Write to Jon Prior.