Foreign Investment - The Big Pull Back

Sizing up what’s ahead for offshore investment in commercial real estate requires sorting through a variety of mixed signals. Capital flows into assets took a hit in 2020 amid the COVID-19 crisis, contributing significantly to the overall slowdown in investment velocity. Even more than in recent years, investors are picking and choosing their targets, while setting a high bar for potential partners.

Yet it is also clear that U.S. assets are highly sought after around the world. Selective and experienced investors are looking for joint venture partners to place their capital, as they continue the hunt for high-yielding assets. Clear favorites are also emerging, from familiar targets like large logistics portfolios and trophy office towers to more recent focuses like life science properties.

“Investment real estate in the U.S. is still very desirable to foreign investors,” said Brian Hosey, vice president & district manager of the global capital group in Marcus & Millichap’s Global Capital Division. “With interest rates at historic lows, many investors (private, family offices and institutions) are looking to preserve wealth and look for a hedge against inflation.”