Overseas Investors See US as Top Safe Haven

The US is a top landing pad for global investment capital. Thanks to a strong economy and dollar, the US is the top safe haven for investors as well as a market with strong yield potential. This year, foreign capital was among the most active investment pools, and in 2020, foreign capital activity is expected to remain a top driver of investment volumes.

“Overseas investors are another bucket of capital that layer into the pool. Interest rates overseas are negative in a lot of the primary countries, and investors are yield starved,” Mike Longo, SVP at CBRE, tells GlobeSt.com. “The US is perceived to be the number one safe haven globally and a place with more yield potential. With the influx of global capital and the US dollar as strong as it is, capital is really attractive to real estate as a safe bet that offers some yield premium. I think that you will continue to see that. As a result, we will continue to keep compression on cap rates and the best assets. Global capital is generally interested in the best markets and the most stable instruments.”

The US commercial real estate market in particular is an attractive option for yield-hungry foreign capital, particularly staked up against current interest global interest rates. “If you are a German trader with a pension fund that you are paying a point on, for example, that is still a spread above the Euro treasury,” Longo says. “If you combine real estate and you can clip a 4% or 5% coupon, that is a really appealing alternative.”