Despite some caution over rising interest rates and a new government, the U.S. remains the most stable and secure country for real estate investment among foreign investors.

New York, Los Angeles and San Francisco are all top global cities for investors, according to an annual survey done by the Association of Foreign Investors in Real Estate.

“Politics [in the U.S.] don’t change business strategy,” AFIRE CEO Jim Fetgatter told Bisnow. “Interest rates are a concern, but it’s been anticipated … The spread between cap rates and borrowing rates [is] going to narrow so it’s going to be a bit more difficult to find investments that pencil out.”

Over 50% of survey respondents felt Brexit would have a positive effect on the U.S. market and the U.S. will continue to provide the best opportunity for capital appreciation. Some of the allocation meant for London is now going toward the U.S.

New York maintained its top spot among U.S. cities for foreign investors. Fetgatter said New York — where he'll be a panelist at Bisnow's foreign investment event later this month— has long been the No. 1 or No. 2 city among foreign investors. Most of AFIRE’s members establish a New York presence when they come to the U.S., Fegatter added.

“Everyone wants to go to New York. It’s the financial capital of the U.S.,” Fetgatter said. “There’s a vibrancy and attractive options in New York.”

Los Angeles has been rising in the ranks among foreign investors, especially as the city builds up its downtown and now offers more opportunities. Three years ago, Los Angeles ranked fifth among U.S. cities, according to Fetgatter.

Washington, DC, which had been the top global city in years past, dropped to the 15th spot among global cities over the last two years. Washington, DC, is expensive and lacks product and development opportunities, Fetgatter said.

The area also is confined. The biggest tenants in DC have long been law firms, many of which are reducing their space per person and eliminating secretaries outright. The federal government is also consolidating space and moving many facilities to military bases. This has led to a contraction of office demand, according to Fetgatter.

Investors are instead looking toward high-tech cities like San Francisco, Seattle and Boston, where there are startups and entrepreneurs chomping at the bit.

San Francisco is the fifth-most sought after U.S. city due to its growing employment, high barrier to entry and the difficulty to develop, Fetgatter said. Its defined urban core also remains attractive. San Francisco previously was the third-most sought after city and Fetgatter speculated some concern over the tech boom becoming long in the tooth could be the case for its drop down the list. Pricing also remains expensive.

Investors have started to turn their attention to Seattle and Boston, where there is a newer tech boom. Fetgatter said Boston’s latest waterfront project has attracted interest from tech companies, and there are more development opportunities in Boston compared to San Francisco.

Along with some shifts in preference for investment in some cities over others, foreign investors have started to look into segments outside of office. For the last five years, multifamily has been a favorite for investors, but in the last year or two, multifamily and industrial have tied as a preference, Fetgatter said.

Last year, industrial pulled ahead as a growing preference among investors. He said half of AFIRE’s members are in office, but an upsurge in demand for warehouses is piquing the interest of many investors.

“The whole distribution network in the U.S. and elsewhere is being transformed by places like Amazon and Walmart,” Fettgatter said. “Trade that is going on in the U.S. and port improvements have put a big emphasis on industrial.”