H2 2024 Global Real Estate Capital Flows

• Total cross-regional capital flows to North America, Europe and Asia-Pacific in H2 2024 increased by 31% year-over-year to US$37 billion. This was the highest half-year total since 2022, suggesting that a market recovery is well underway. However, volume was considerably lower than the most recent peak of US$88.5 billion in H2 2021.
• The industrial & logistics sector attracted the most cross-regional investment for the fourth consecutive half-year period. Its 47% share was the highest on record, with strong volume across all regions. The office sector saw a marked recovery in cross-regional volume in H2 2024, up by 50% year-over-year to US$7 billion. Retail and multifamily cross-regional investment volume remained stable but decreased slightly for hotels.
• U.S. total inflows increased by 40% year-over-year in H2 2024 to US$9 billion. Investors were particularly attracted to prime industrial & logistics and office assets in key markets such as New York, Boston and San Francisco.
• Europe, consistently the largest recipient of cross-regional investment, had a 10% year-over-year increase in cross-regional inflows in H2 2024 to $US 21.63 billion. North American investors accounted for most of Europe’s total inflow. While macro-economic and political uncertainty remain, market conditions continue to improve.
• Cross-regional inflows to Asia-Pacific grew by 221% year-over-year in H2 2024 to US$6.3 billion. North American investors were particularly active in Australia and Japan with landmark deals in the industrial & logistics, office and hotel sectors.
• The global economy is expected to continue recovering as interest rates fall, which in turn should stimulate occupier demand for real estate. However, long-term government bond yields remain high, especially in the U.K. and U.S., which might limit cap rate compression. Nevertheless, we expect to see investment volume increases this year of 8% for the U.S., 15% to 20% for Europe and 5% to 10% for Asia-Pacific.

Global Capital Overview

Total cross-regional capital flows to North America, Europe and Asia-Pacific in H2 2024 increased by 31% year-over-year to $US37 billion. This was the highest half-year total since H2 2022, although it was considerably lower than the most recent peak of US$88.5 billion in H2 2021. All three global regions had year-over-year increases in cross-regional inflows, suggesting that global market recovery is well underway.

The industrial & logistics sector attracted the most cross-regional investment for the fourth consecutive half-year period. Its 47% share was the highest on record. In the largest industrial & logistics markets globally, occupancy rates remained healthy, rents stayed above pre-COVID levels and tenant defaults were limited. Furthermore, the narrow pricing gap between sellers and buyers led to higher levels of cross-border investment. Approximately 15% of total global industrial & logistics investment volume came from cross-regional capital, the most of any sector.

The office sector also saw a sizable increase in cross-regional investment volume in H2 2024, up by 50% year-over-year to US$7 billion. While cross-regional inflows targeting North American office assets in H2 2024 were down by 54% from the previous five-year H2 average, Japanese and European investors expressed improved sentiment about the U.S. office market in Q4 2024. This was particularly evident for prime office buildings and portfolios in gateway markets like Manhattan, Boston, San Francisco and Washington, D.C. Meanwhile, U.S. investors were particularly active in the Australian and Japanese office markets, capitalizing on Australia’s aggressive repricing and Japan’s stable debt environment. Retail and multifamily cross-regional investment volume remained stable in H2 2024, while hotel sector volume saw a slight decline.

Since 2020, global-cross regional capital flows have increasingly targeted the industrial & logistics sector.

The retail, residential, hotel and office sectors each accounted for between 10% and 20% of total cross-regional investment volume, approximately 5% of which came from cross-regional capital.

Property Sector Share

Cross-regional Inflows by Region

Cross-regional Outflows by Region

Cross-regional Inflows by Market

Cross-regional Outflows by Market

North America

Cross-regional investment to North America in H2 2024 increased by 40% year-over-year to US$9 billion, driven primarily by European investors. Nevertheless, cross-regional inflows were nearly half the previous five-year H2 average. Asia-Pacific investors, traditionally the most active foreign investors in North America, stayed mostly within their region due to the strength of the U.S. dollar and increased government policy uncertainty. In particular, the strong dollar has pushed Korean and Japanese investors to focus on domestic investment in the interim, while Singaporean investors have shifted to Japan due to the low debt cost environment. Investment from Europe increased for the fourth consecutive half year, closing at US$4.97 billion spread almost equally between the office and industrial & logistics sectors.

Gateway and top-tier secondary markets continued to attract cross-regional capital to the region. New York City received US$2.3 billion in foreign investment, the most of any North American market. Two large acquisitions of prime office buildings in Manhattan were completed by a Japanese developer and a German life insurance company, each for more than US$500 million.

San Francisco also saw a significant uptick in foreign investment, largely from a US$1.2 billion acquisition of an industrial & logistics portfolio by U.K. investors. Boston, Miami, Chicago and Washington D.C. continued to generate strong levels of foreign investment.

Foreign investment in the industrial & logistics sector surged to US$4.2 billion in H2 2024, up by 180% year-over-year and marking the sector’s fifth highest H2 total on record. With positive demand indicators and signs of supply stabilization, the office sector was the second most-sought-after property type for cross-regional investment.

At the beginning of 2025, capital markets activity faced challenges due to relatively high long-term bond yields. CBRE expects that investment activity will be relatively muted in the first half of the year, with the 10-year Treasury yield remaining above 4%. This is largely influenced by high budget deficits, inflation trends and ongoing policy uncertainty.

Uncertainties about tariffs and trade also could inhibit cross-regional investment in the U.S. in the near term. However, as policy clarity improves, we expect volatility to diminish, paving the way for more favorable investment conditions. This progression could contribute to a stronger second half of 2025, supported by improved buying intentions of investors.

Europe

Following the European Central Bank’s initiation of an interest-rate-cutting cycle in June 2024, the region saw increased investment activity. Cross-regional capital inflows in H2 2024 increased by 10% year-over-year to US$21.63 billion. However, investors remained cautious as they awaited further rate cuts and resolution of political uncertainty, particularly in France and Germany.

London remained the top European city for cross-regional investment, although volume fell by 19% year-over-year in H2 2024.

Elsewhere in Europe, Dublin’s Blanchardstown Shopping Center was purchased for approximately US$600 million by a private equity firm. Several southern European markets such as Madrid, Barcelona and Milan also saw significant cross-regional inflows, largely fueled by a surge in tourism and immigration. German cities, which have historically received considerable cross-regional investment, have yet to see demand fully return.

The industrial & logistics sector accounted for 50% of all cross-regional capital inflows to Europe, more than one-third of it to the U.K. Cross-regional investment in the European office sector increased by 30% year-over-year but remained lower than the historical half-year average. The retail, hotel and residential sectors all had moderate declines in H2 2024 cross-border volume.

The investment outlook for Europe is positive for 2025. Further interest rate cuts are expected, with CBRE forecasting policy rates falling to 2.15% for the Eurozone and 3.75% for the U.K. by year-end. Seventy-five percent of respondents to CBRE’s latest European Investor Intentions Survey expect increased investment activity this year. In prime market segments, capital values continue to recover and yields are showing early signs of compression. Sentiment has also strengthened for retail and hotel assets as demand has become more robust.

Asia-Pacific

Cross-regional inflows to the Asia-Pacific region surged by 221% year-over-year in H2 2024 to US$6.3 billion but remained well below the half-year average of US$7.2 billion from 2019 to 2023. This marked the first half year since H1 2021 in which cross-regional inflows outpaced outflows (US$4.47billion). North American capital inflows, particularly from U.S.-based fund managers, increased by 2% year-over-year in H2 2024 to US$5.62 billion, primarily in Japan.

Tokyo, Sydney and Singapore continued to dominate cross-regional inflows to Asia-Pacific. These three markets had a combined US$3.7 billion of cross-regional inflows in H2 2024 and are expected to remain the top investment destinations in 2025, according to CBRE’s latest Asia-Pacific Investor Intentions Survey.

While the industrial & logistics sector remained particularly attractive to cross-regional investors, the office sector saw increased interest, especially in Sydney and Tokyo. Pricing for office assets in the region have neared a peak, leading to increased inquiries for premium assets. The hotel sector, particularly in Japan, continued to appeal to North American investors due to the low debt environment and strong performance fundamentals.

Asia-Pacific investment activity is expected to further increase in 2025; however, macroeconomic uncertainty persists with the potential for fewer interest rate cuts than were expected six months ago. Despite this, investor sentiment is improving, with REITs and fund managers indicating that they will increase their real estate investment activity this year.

CBRE forecasts a 5% to 10% increase in Asia-Pacific commercial real estate investment volume this year, driven by growth in Singapore, Korea, Australia and Hong Kong SAR and continued investor interest in Japan and India. With Asia-Pacific markets at different stages of the pricing cycle, yield movement will diverge across markets. This will present opportunities for cross-regional investors to acquire assets at attractive prices, with market fundamentals across the region (excluding Greater China) expected to see solid growth in 2025.

Cross-regional Inflows by Sector

Cross-regional Outflows by Sector

Sector Market Share Inflows

Sector Market Share Outflows

Cross-border capital flows are expected to further increase in 2025 as interest rates continue to fall and market fundamentals improve.

Favorable currency exchange rates will make Europe the preferred international region for North American investors. European bid-ask spreads will continue to narrow and occupier demand should improve in the latter half of the year.

In Asia-Pacific, North American investors will primarily seek prime, well-located office and industrial & logistics assets in India, Australia and Japan, where government spending and consumption have supported market recovery. European and Asia-Pacific investors will likely continue to target prime North American assets, especially in the office and industrial & logistics sectors, as pricing levels further stabilize.

Global real estate investment volumes are expected to increase by 11% this year, driven by a resilient global economy and falling interest rates. However, downside risks remain, particularly due to elevated long-term bond yields, potential tariffs and geopolitical uncertainties.