February 14, 2020
Outflows from U.S. real estate investors in 2019 exceeded inbound investment into U.S. commercial properties for the first time since 2014, CBRE reported. This wasn’t due to a significant increase in U.S. investor activity overseas, but rather to a 54% year-over-year drop in foreign investment into the U.S.
That 54% drop itself requires some additional explaining. CBRE noted that the Y-O-Y decline in 2019 was 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, said CBRE. “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%.”
The largest pullback was in Chinese capital, which totaled just $468 million in 2019 after averaging $5 billion annually since 2013.
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