Cross-regional flows between North America, Europe and Asia-Pacific totaled $30.5 billion in the first half of 2023, representing a year-over-year decrease of 52%, according to CBRE’s Global Real Estate Capital Flows H1 2023 Report. The fundamentals driving this decline are well known: increased interest rates, softer real estate fundamentals and different pricing expectations between buyers and sellers. Additionally, CBRE analysts noted that less North American capital flow to Europe due to high interest rates, economic uncertainty and constrained debt markets contributed significantly to the drop in inflows.
Europe experienced a two thirds decrease from its previous year’s total ending at $14.7 billion – an especially notable figure as it is typically the largest recipient of cross regional investment by far with an influx totaling $45.9 billion during H1 2022 alone.. Meanwhile international capital inflows into APAC decreased by approximately one third from last year’s figure ($605 million) down to just over 4 billion dollars for H1 2023 . Japan however saw relatively strong volume coming out of North America thanks largely due positive carry , more favorable exchange rates , lower finance costs .
North American investments on the other hand rose 5% YoY from 11 point 2 Billion Dollars up 11 point 75 Billion Dollars . Major acquisitions included Singapore based GIC ‘s 14 Billion Dollar buyout STORE Capital REIT (in partnership with Oak Street Real Estate Capital Partners ) as well as Japan’s Mori Trust Co Ltd ‘s 2 Billion Dollar deal with SL Green for 49 point 9 percent stake 245 Park Avenue New York City property . Other highly targeted markets were Los Angeles Dallas Charlotte Canada which saw record breaking Cross Regional Inflows totaling 2 Point Two Billon Dollars mainly focused Calgary Montreal Toronto areas ..
Industrial properties proved most popular among global investors resulting 10 Point 8Billion dollars worth transactions accounting 37% share total cross regional volume Of 4 Point 8Billion invested industrial logistics properties 303 Million came directly Singapore Investors .. Retail sector also experienced increase twenty percent YOY primarily attributed GIC 14 BILLION DOLLAR BUYOUT Store CapitaL REIT though cap rate expansion expected be less than other sectors future near mid term investments still exceed pre pandemic levels … Multifamily sector declined 40 % YOY but investor demand remains high housing affordability issues increasing household formation decreasing new development… Office Sector meanwhile fell 80 % YOY mostly attributed European market yet office fundamentals remain strong while limited investment seen US APAC dropped 69%.
