U.S. Commercial Investment Capital Outflows Now Exceed Inflows

With the longest recorded global economic expansion, foreign commercial property investors are now facing an increasingly complex equation to find cost-ffective opportunities for potential downturn defense, and sluggish cross-border capital flows.

The 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.

Foreign investors are also venturing into secondary and tertiary locations, though proximity to gateway markets is still preferred. Industrial hubs and demographic-driven multifamily markets are considered attractive now too.

Mirroring cross-border investment trends at home, the share of U.S. outbound investment in foreign multifamily and industrial assets has grown tremendously since the prior cycle. As these sectors expand, the share of total outbound capital devoted to office investment has declined the most.

U.S. investors deployed less capital to all top foreign destinations in H1 2019 than they did in H1 2018, with the exception of the U.K. However, large shifts in outbound volume to these countries have been the norm in the current cycle.

Although U.S. outbound investment to many of the typical top destination countries has slowed, certain markets within those countries like Helsinki, Osaka, Barcelona, Berlin and Shanghai continue to register significant volume growth.

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