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 decline can be attributed to increased interest rates, softer real estate fundamentals and different pricing expectations between buyers and sellers as well as less North American capital flow to Europe due to high interest rates, economic uncertainty and constrained debt markets.
Europe experienced the largest drop in inflows with a two thirds decrease from $45.9 billion during H1 2022 ending at $14.7 billion for H1 2023; however Japan received “relatively strong volume from North America” due largely in part by positive carry exchange rate advantages coupled with lower finance costs while Asia Pacific saw an approximate one third decline from $6.05 billion last year down to 4$06 this year . In contrast cross regional investment into North America rose 5% over last years figures totaling 11$75 Billion driven by major acquisitions such as Singapore based GIC’s 14 Billion dollar buyout of STORE Capital REIT partnered with Oak Street Real Estate Capital Partners along side Japan’s Mori Trust Co Ltd 2 Billion Dollar deal acquiring 49 point 9 percent stake in New York City’s 245 Park Avenue . Major cities targeted included New York , Los Angeles , Dallas & Charlotte while Canada saw its highest ever half yearly total reaching 2 point 2 billions dollars mainly invested into Calgary Montreal & Toronto .
Industrial properties were favored amongst global investors resulting 10 point 8 billions dollars being spent on industrial & logistics transactions accounting for 37% share of total cross regional volume out which 4point 8 came specifically from Singaporean investors targeting US industrial properties alone Retail investments also increased by twenty percent thanks largely again too GICs 14billion dollar buyout though future cap rate expansion is expected too be less than other sectors Multifamily investments declined 40 % YoY yet demand remains high given housing affordability issues increasing household formation combined decreasing new development Office sector investment dropped 80 % YoY primarily because off European market conditions though office fundamentals remain strong Cross Regional Investments within APAC office sector decreased 69%.
