Foreign Investments in U.S. CRE Made Major Comeback in 2021
A Small, But Important Segment
- Foreign investment in U.S. CRE jumped to $69B in 2021, up 36% from 2019; Makes up about 10% of total CRE volume
- $33B placed in 4Q21 – Second highest quarter on record
- In the last 10 years, Canada comprised 32% of foreign capital, followed by Singapore, China, Germany, S. Korea
Where is International Capital Flowing To?
- Foreign investors favor gateway markets; New York, San Francisco, and Los Angeles lead the list
- Apartment and Industrial comprised most sales activity in 2021; Office, Hotel, and Retail have also been favorites
- Tend to favor portfolios and large assets
Foreign Investors Provide New Investment Opportunities
- Foreign investors may accept lower cap rates since their yield alternatives may differ greatly from the U.S.
- Some seek the stability of U.S. CRE – Willing to pay a premium to place large quantities in safe investments
- For sellers with properties in the right segments, foreign investors can be a worthwhile consideration
Includes sales $2.5 million and greater
Sources: Marcus & Millichap Research Services, Real Capital Analytics
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