COVID Continues to Impact Commercial Property Investment, Globally
E-mail Sign up for our free weekly newsletter
Commercial real estate consultancy CBRE reported this week that U.S. inbound capital fell 6% year over year to $ 11.6 billion in the first half of 2021 – its weakest first half since 2013.
In contrast, investor appetite for international industrial assets resulted in an 11% increase in U.S. outbound capital, which rose to $ 23.1 billion in the first half of 2021.
Inbound Investment Trends in the US
- US industry, which was the most resilient sector in terms of real estate fundamentals during the pandemic, attracted 21% less foreign capital in the first half of 2021 than a year ago, given high prices and intense demand from domestic investors. Office saw the smallest drop in investment year-over-year (-5%), suggesting the sector may stabilize.
- Investors from Canada, Singapore and China invested more capital in the US in the first half of 2021 than in the first half of 2020. Great Britain, the 10th year-over-year investment in the first half of the year, rose 94% in the first half of the year.
- In the first half of 2021, compared to the H1 average for the past five years, incoming capital increased in only 12 of the top 50 U.S. incoming capital markets and declined an average of 61% in each of the top five U.S. markets. Those with the strongest growth from the five-year average were all next to major Gateway metros: San Jose and Oakland (San Francisco Bay Area), Northern New Jersey (New York City), and Richmond and Baltimore (Washington, DC). This reflects the pandemic-era shift away from dense urban centers and towards lower-cost peripheral markets.
US outbound investment trends
- US investors are still excited about international industrial real estate. US investment in overseas industrial assets increased 84% year over year and represented 42% of total US foreign capital in the first half of the year.
- The UK remained by far the top US foreign capital destination for the first half of the year, receiving the largest share of US investment in all sectors except hotels. Compared to the H1 average over the past five years, US investments in the UK increased 128% in the first half of the year.
- The top five overseas markets for U.S. investment (based on 2016-2020 total capital) saw more stable capital flows than the top U.S. incoming markets during the pandemic. Outgoing capital in H1 2021 was higher in Paris than the H1 average of the last five years, flat in Berlin and slightly declining in London.