Foreign money is pouring into U.S. commercial real estate faster than it has in four years. Foreign sovereign wealth funds, pensions, and other institutions bought $70.8 billion of U.S. commercial real estate assets last year, according to Real Capital Analytics. That’s nearly double the 2020 foreign investment numbers and the highest total since 2018, a clear sign that foreign investment has rebounded from pandemic concerns.
While investors in Canada, Singapore, South Korea, and the U.K. led the way once again, where that money is going is changing. Previously offices and hospitality investments in New York, San Francisco, and Chicago garnered the lion shares of foreign investment last year multifamily, warehouses, and life sciences were the hot sectors for investment. Geographically foreign investors favored Sunbelt cities and smaller markets. A record 64 percent of foreign investments were in nonmajor markets.
“It is a different world,” JLL Global Head of International Capital Coverage Riaz Cassum told the WSJ. “You’re starting to see big institutional investors looking at Dallas, Charlotte, Denver, Nashville, Austin and other high-growth, low-tax markets.”
Both foreign and domestic investment and property sales had a great year in 2021. Experts say that’s down to 2020 putting a pause on most capital spending as investors entered a wait and see mode. As the dust settled in 2021, investors with pent-up demand for real estate assets finally pulled the trigger on investments helping the sector recover from the pandemic downturn.
