Real estate investors are back on the road
Cross-border investment hits a quarterly record as deal volumes recover
Real estate investors are looking outside their own borders again amid a hunt for diversification and easing travel restrictions.
Cross-border investment reached its highest quarterly level on record at US$126 billion at the end of last year, according to JLL data. It’s a marked contrast from just half a year ago, when investors staying closer to home dampened cross-border deal flow.
“While travel restrictions have impacted investors’ abilities to deploy capital between regions, we’re now seeing interregional investment volumes accelerate,” says Sean Coghlan, global head of capital markets research and strategy at JLL.
All regions attracted significant inbound investment. Outperforming was the Americas, where cross-border investment represented 29% of volumes in the final quarter of 2021. Overall, US$124 billion of cross-border capital was deployed in 2021 in the region, a record high.
In EMEA and Asia Pacific, inbound investment is rebounding but remains modestly below pre-COVID norms. Global investors were active in EMEA, investing US$36 billion in 2021 – a 2% increase from pre-pandemic levels. U.S. and Singaporean firms drove interregional volumes in the region, specifically targeting office and logistics assets in the UK. And in Asia Pacific, the return of intraregional capital – particularly Hong Kong and Singaporean firms acquiring in China and Australia – supported the recovery.
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“The appetite for logistics, living and alternatives assets has bolstered the return of cross-border capital flows, and large investors are investing at scale. This trend and sustained, elevated acquisition activity from global investors, highlights the resilience of capital markets in real estate,” says Coghlan.
Living and logistics continue to lead recovery
Cross-border investors continued to increase their exposure to the income stability offered by living assets, with US$50 billion invested in U.S. living alone last year. Larger-ticket logistics portfolios, such as GIC’s US$6.8 billion purchase of a portfolio from EQT Exeter in the U.S., represented over half of interregional investment in the Americas.
“In all regions, there’s strong appetite for logistics real estate among cross-border investors. Investment in offices, while improving quickly, has lagged, although as pandemic restrictions ease and the return to the workplace accelerates, activity will increase in the sector,” Coghlan says.
Cross-border investment in offices in the Americas nearly doubled in 2021, and office transactions are now driving investment in Asia Pacific, where the sector accounted for 43% of interregional purchases – up from a 19% a year ago.
“The world’s most mature and diversified markets have so far led the recovery, but less established geographies are building momentum,” says Coghlan. “The same may also be said for more disrupted sectors.”
Contact Sean CoghlanGlobal head of capital markets research and strategy
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