September 5, 2018
Cross-border investment in U.S. commercial real estate is expanding, again. The latest Real Capital Analytics’ (RCA) “US Cross-Border Investment Compendium” shows cross-border direct acquisitions have been growing as a share of all deal volume for two consecutive quarters, following a decline that started in 2015.
RCA CRE economist Jim Costello also notes, cross-border investment has been getting bigger in the sense of the structure of deals, with a handful of multibillion dollar platform plays driving the growth.
This growth in deal volume comes at a time when investors worldwide are concerned about global moves towards protectionism, writes Costello, who relays that fears have been raised among CRE industry colleagues that protectionist sentiment will drive capital away from the U.S. “With some exceptions, cross-border investors are focused on longer-term objectives and can work through these temporary challenges,” writes Costello.
Platform plays are emerging as an increasingly important aspect of the market. RCA reports that from Q1 2015 to Q2 2018, megadeals accounted for 45% of cross-border deal volume but only 28% of the market overall. In Q2 2018, megadeals claimed 54% of cross-border volume and 27% of the the total U.S. market, the new RCA report shows.
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