Report | Intelligent Investment
U.S. Multifamily Inbound Investment Trends
- International investment in U.S. multifamily assets in H2 2020 fell by just 5% year-over-year to $5.7 billion, despite continued COVID-19 international travel restrictions and market uncertainty.
- For the full year, international investment in U.S. multifamily assets fell by 22% to $9.7 billion. Considerably lower hedging costs made global capital more competitive, helping to mitigate the decline from 2019 levels.
- The largest deal in H2 2020 was London-based GSA Group’s acquisition of a 27-asset student housing portfolio in 18 states and reportedly valued at $700 million. Student housing assets accounted for 43% of total international U.S. multifamily investment in H2 and 30.2% for the full year.
- International capital accounted for 6.4% of all U.S. multifamily investment in H2 2020 and 6.7% for full-year 2020—below the 2015-2019 average of 8.6%.
- Canada, the perennial leader in U.S. inbound multifamily capital, accounted for 64.1% of international U.S. multifamily investment in H2. The U.K., Switzerland, Germany, Bahrain, South Korea and Japan were distant followers.
- Pension funds accounted for 33.8% of total inbound capital in H2—an increase of 75.4% year over year—followed by investment managers at 26.7% and private buyers at 24%.
- Washington, D.C., Atlanta, Dallas/Ft. Worth, Phoenix and Seattle were the leading destinations for international capital in H2, together comprising 40.3% of total international volume targeting multifamily.
- Among the 11 markets with at least $100 million of international investment, San Diego had the largest year-over-year gain (+371%), followed by Phoenix (+260%) and Dallas/Ft. Worth (+80%).
- One-third of H2 international investment was in multifamily assets priced at $100 million or more, double the share of domestic investment. International investors also preferred mid-/high-rise assets over garden properties (67.8% vs. 32.2% share).
- International investment in U.S. multifamily assets is expected to increase in 2021, aided by continued historically low hedging costs. We anticipate activity picking up next year, especially in the second half, fueled by strengthening market fundamentals and an easing of international travel.
Note: Based on real estate transactions valued at $2.5 million or more. Volume includes direct multifamily property acquisitions only (excludes other types of investment, such as land acquisitions, development, investment funds, REIT stocks, etc.). Portfolios include assets acquired through entity-level deals. Totals include student housing. All figures in U.S. dollars.
Source: CBRE Research, Real Capital Analytics, Q4 2020.