Reversing Course: U.S. Commercial Investment Capital Outflows Now Exceed Inflows

WORLD PROPERTY JOURNAL | February 14, 2020

With the longest global economic expansion on record, international commercial property investors now face an increasingly complex calculus in identifying cost-effective opportunities for potential downturn protection, and slowing cross-border capital flows. Because of such, CBRE is reporting this week that inbound capital to the U.S. dropped 54% in 2019, largely due to a sharp decrease in entity-level sales that tend to be highly volatile from year to year. In 2018, rising U.S. interest rates and discounted REIT share prices contributed to entity-level sales' unprecedented 51% share of total inbound volume. But as these trends reversed in 2019, this share dropped to just 6%. Excluding entity-level transactions, 2019 inbound investment decreased by a more moderate 12.1%.
With U.S. capital outflows down by just 1% from 2018, the amount of capital that U.S. investors deployed in foreign real estate markets exceeded inbound capital by nearly $18 billion in 2019. Sovereign wealth funds, insurance companies and pension funds (SWIP) together accounted for 30% of inbound volume in primary markets during H1 2019 compared with just 3% in secondary markets.

Spotlight

If you’re looking to buy a home, you may want to put these items on your to-do list to ensure you hit your goals. It’s important to start working on your credit and saving for a down payment early. When you’re ready to begin your search, work with a real estate professional and get pre-approved so you know how much you can borrow. Connect with a real estate advisor so you have the guidance you need to achieve your homebuying goals this year.

Spotlight

If you’re looking to buy a home, you may want to put these items on your to-do list to ensure you hit your goals. It’s important to start working on your credit and saving for a down payment early. When you’re ready to begin your search, work with a real estate professional and get pre-approved so you know how much you can borrow. Connect with a real estate advisor so you have the guidance you need to achieve your homebuying goals this year.

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