US global investment fell to a seven-year low in 2020 with both inbound and outbound capital flows dropping, according to new research from CBRE. Foreign investment into the US declined by 31% year-over-year to $28 billion, while outbound capital flows declined 29% to $41.6 billion.
Investment from EMEA-based capital in to the US declined the most significantly, down 63% for the year. Investment from both Canadian and APAC capital sources remained stable, with investment from South Korea and Singapore increasing a notable 48% for the year.
Most active foreign capital targeted core assets in tier one markets. Manhattan, Seattle, Atlanta, Dallas and San Francisco were the top markets for foreign investment, but smaller emerging markets also caught investor attention. Indianapolis and the Inland Empire topped the list for the top annual growth rate of foreign investment. Industrial and multifamily were the favored assets among these investors. It is worth noting that UK investment, while not among the top foreign investment sources, increased 10% year-over-year.
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According to Alex Foshay, vice chairman and head of Newmark Capital Markets' International Capital Markets Division, low interest rates helped to drive much of the inbound US investment activity. He saw activity increased from South Korea and Singapore, as the CBRE report notes, as well as Germany and the Middle East. Korean institutions were up 93% in equity investment in US commercial real estate versus 2019, while Singaporean groups have increased their investment by 17% over the same period. Industrial and multifamily were the top asset classes for these investors as well, in sync with the CBRE research.
While outbound foreign investment declined, the US remained a net buyer of foreign assets in 2020. According to CBRE research, net outflow totaled $14 billion. US investors decreased acquisition activity in Europe; however, the market still attracted 77% of outbound capital from the US. Industrial and office were the top asset classes for outbound US capital, with industrial investment up 31% for the year. This is the first time that industrial replaced office as the top asset class for outbound US capital. Alternative assets were also favored by US capital, with investment up 19% for the year. Multifamily investment declined 2% for the year.
While outbound investors also favored established, top-tier markets, investment also increased in emerging markets, particularly in Central and Eastern Europe. In addition, investment in Shanghai and Copenhagen more than doubled from 2019.
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Kelsi Maree Borland
