Foreign Investors Focus on US Apartments, Industrial Asset Classes
Globally, sales of commercial real estate hit $1.3 trillion last year.
Cross border investment in US properties has skyrocketed against the backdrop of record-high sales of commercial real estate globally.
Overseas investors focused primarily on the apartment and industrial sectors in 2021 and total cross-border deal volume hit nearly $71 billion, nearly double 2020 levels, according to Real Capital Analytics. Cross-border deals accounted for 8.5% of total US property acquisitions and are officially back to pre-pandemic levels.
Globally, sales of commercial real estate hit $1.3 trillion last year, with the US, Asia Pacific and Europe all posting record trading volume.
“While the cross-border share of total investment has stayed about constant, the placement of the capital has changed,” RCA notes in the latest US Cross-Border Investment Compendium. The chief targets/? Industrial, which accounted for 34% of cross-border capital, and apartments, which totaled 30%.
Total sales of income-producing property in the Americas in 2021 were double 2020 levels, thanks to a big leap in US apartment trading. That’s leading to big pricing upticks in hot asset classes, Aaron Jodka, director of research US capital markets at Colliers, told GlobeSt.com in an earlier interview.
“We’ve never seen faster price appreciation here in the US as we have in recent quarters,” Jodka said. “And we’re really seeing that concentrate in industrial, multifamily, and select office, with life science adding in there as well. What happens is you see investors migrating capital to different locations and different assets in order to chase yield and find returns.”
And the focus on those asset classes also gave cross-border investors “deeper exposure to the non-major markets of the US,” according to RCA. The numbers bear that out: in 2021, just 38% of cross-border capital focused on the six biggest US metros. Manhattan fell to the #3 spot, behind Boston and Atlanta.
Meanwhile, the CBD office market – traditionally viewed as an overseas investor favorite – comprised just 14% of the 2021 total.