Steve Canty
Director, GRS Group
(858) 433-0441
[email protected]
While overall investment in U.S. commercial real estate buys has only increased slightly, the amount of foreign dollars being put into domestic properties jumped during the first half of the year, according to a recent National Real Estate Investor article, citing data from Real Capital Analytics.
The transaction amount by foreign investors rose 27 percent during the period, while overall deal volume was only up three percent.
However, the bulk of deals from international firms was for big portfolios, and single-asset buys are decreasing. Among the major deals that took place in the first half of 2018 were: Paris-based Unibail-Romanco buying Westfield’s U.S. mall portfolio for $17 billion and China-based Nesta Investment Holding’s $11.6-billion buy of Global Logistics Properties.
Though there was more spending by theses foreign firms as far as dollar value, overall deal volume has fallen, pointed out a Cushman & Wakefield executive in the NREI article. Overall cross-border transactions are said to be down 24 percent in the last 12 months. Most of the top 20 countries that investment in U.S. commercial real estate pulled back their number of deals, with the exception of firms from Australia, France, The Netherlands and Singapore.
There are also some changing trends as to where and what foreign firms are purchasing. Secondary markets are still not as popular as gateway cities, but the deal volume in those locales is reportedly increasing exponentially. And whereas office has mostly dominated in these deals, industrial, seniors and student housing have all seen boosts by overseas investors.
Meanwhile, a BDO executive pointed out recently that China is falling from its perch with firms based there that spend the most on U.S. commercial real estate. Though it is still the country with companies that spend the most money, their purchases were down 30 percent in 2017 from the prior year. They also sold $1.3 billion in U.S. assets so far this year, which is more than any single year, according to RCA. This is reportedly due to increased restrictions on China-based investment into foreign countries.
However, the United States will likely be a place where investors from overseas will want to continually place money, especially with continued strong fundamentals across its sectors and major metro areas, depending on the locations of particular assets.
If strong fundamentals continue with the health of the U.S. economy, that trend is not likely to drop off dramatically going forward.
About GRS Group:
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.