Intelligent Investment

Global Cross-Regional Investment Volume Nears Stability

Global Real Estate Capital Flows H1 2024

August 28, 2024 7 Minute Read

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Executive Summary

Total cross-regional capital flows between North America, Europe and Asia-Pacific were relatively unchanged in H1 2024 from H2 2023 at $US26.7 billion. This, combined with H1 2024 volume declining by only 10% year-over-year vs. 45% in H2 2023, indicates that global capital flows are stabilizing.
Some positive signs have begun to emerge. North American investors were more active in major European markets and increased their acquisitions of office assets, particularly in New Delhi. However, bid-ask spreads need to narrow before capital fully redeploys in the Asia-Pacific region.
Industrial & logistics and multifamily assets continued to receive the most cross-regional investment, while the hotel sector accounted for 22%. Total volume to the retail sector increased by 1% over its five-year average. Office sector investment volume remained subdued.
As many of the world’s central banks begin cutting interest rates, cross-regional investment is expected to increase in 2025.

Global Capital Overview

Global cross-regional capital flows between North America, Europe and Asia-Pacific totaled US$26.7 billion in H1 2024, down by 10% year-over-year. Global investment volume for the full year is expected to match that of 2023, supporting expectations of an improved market in 2025.

Cross-regional capital flow to Europe increased by 30% year-over-year to US$18.4 billion. North American flows to the hotel sector and to the U.K. were especially strong. Cross-regional flows to London doubled year-over-year and increased substantially in secondary cities such as Manchester and Bristol.

The industrial & logistics sector attracted the most cross-regional investment globally for the third consecutive half-year period, while the hotel sector had a global market share of 22%. Retail cross-regional investment was marginally above its post-pandemic H1 average, while multifamily investment increased by 20% year-over year. Office investment continued to decline, hitting its lowest H1 total since 2009.

While H1 cross-regional investment remained subdued by historical standards, it was on par with H2 2023 and fell by only 10% year-over-year in H1 2024—much less than the 45% year-over-year decline in H2 2023. Following a period of great uncertainty due to high inflation and interest rates, CBRE expects improved global investment market conditions later this year. As global interest rates fall, the opportunity for investors to take full advantage of discounted assets will start to fade.

Top Regional Inflow & Outflow

*H1 2024 percent change relative to the 5-year H1 2018-2023 average.
Note: All figures in US$.
Source: CBRE Research 2024, MSCI Real Assets.

Investment Trends by Region

North America

Cross regional capital flows to North America in H1 2024 fell by 58% year-over-year to US$5.25 billion—the lowest H1 total since 2012. This was primarily due to a significant slowdown in Asia-Pacific capital inflow as investors from that region were more focused on domestic assets. Although investment from Europe increased by 44% year-over-year to US$3.45 billion, it was 4% below the five-year average.

New York City received the most global capital of any North American city with US$1.15 billion, more than 80% of it from one major French investor’s retail acquisition on Fifth Avenue. Boston was the second most targeted North American city, attracting US$856 million in global capital, while Vancouver was third with US$519 million.

North America had the smallest market-share deviation between commercial property sectors. Industrial & logistics, office and retail each received approximately 20% of total regional capital inflows, while the hotel sector received 18%—its highest half-year total since 2016. This relatively even distribution highlights foreign investors’ willingness to deploy capital across North American property sectors and signals improved investment activity as market conditions improve.

Europe

While cross-regional capital flows to Europe in H1 increased by 30% year-over-year to US$18.4 billion, they were 40% below the five-year average amid high debt costs and wider bid-ask spreads. Nevertheless, yields for prime assets across all sectors have stabilized, with rents and capital values in key cities showing improvement. After an initial interest-rate cut by the European Central Bank in June, expected further cuts should boost real investment activity this year.

Nearly all major European markets saw increased investment year-over-year. The U.K. and Germany were once again the strongest attractors of cross-regional capital flows, as investors from North America and Asia-Pacific capitalized on discounts in primary markets.

Industrial & logistics and multifamily assets comprised 34% and 25% of cross-regional capital flows to the region, respectively. Investment in the hotel sector more than doubled year-over-year to US$3.4 billion.

Asia-Pacific

Cross-regional capital flows to Asia-Pacific increased by 1.6% year-over-year in H1 to US$3.16 billion. Foreign investment in the region remained at a low level as repricing lagged that of the U.S. and Europe. North America-based investors—typically the biggest contributors of cross-regional capital flows to Asia-Pacific—accounted for only US$3 billion in H1 2024, down by 42% from their five-year average.

India saw a strong return of foreign capital in H1, particularly from U.S.-based investors. Global cross-regional inflows to India more than tripled year-over-year in H1 to US$1.39 billion. Foreign investors appear increasingly interested in office assets, especially in New Delhi.

The Asia-Pacific hotel sector also had strong interest from foreign investors and accounted for approximately 40% of all cross-regional inflows in H1. Hotel investment activity was particularly strong in Japan and Korea.