RCA Insights

US Cross-Border Investment Compendium: Trends in Capital Flows

By on May 15th, 2017

Direct acquisition activity by cross-border investors in the U.S. has been pulling back in recent quarters, and at a greater magnitude than the pullback in domestic investors’ deal activity, a new report from Real Capital Analytics shows.

Total deal volume by cross-border investors (on a four-quarter trailing basis to negate seasonal effects) was down a cumulative 33%  in Q1’17 from Q4’15, when cross-border investment levels were at the near-term peak. Over the same time frame, activity by domestic investors declined a cumulative 8%, the new US Cross-Border Investment Compendium shows. Even though deal activity is down more sharply for the cross-border investors in recent months, this activity is still elevated.

 

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A capital retreat from no single region is driving the pullback, though capital from Asia has pulled back less than that from other regions of the world. It is limiting to look at Asian investors as a group, however, as the motivations and investment styles of market participants vary vastly by country.

For instance, in a separate RCA Insights post coming later this week, we will be looking at this question of investor objectives from the perspective of capital outflows from China. While activity was down in Q1’17 with a lot of noise around capital controls, there is scant evidence of a slowdown underway so far in Q2’17.

If you are a current RCA subscriber log into your account to download the inaugural US Cross-Border Investment Compendium from the Special Reports section of the Capital Trends reports page.

Updated 5/17/2017.

Jim Costello

Jim Costello

Senior Vice President
jcostello@rcanalytics.com

Jim Costello has worked in the CRE space on issues of urban economics since 1990, including a 20-year stint at Torto Wheaton Research. Jim expanded the reach of the Torto Wheaton Research team developing forecasts of global market fundamentals. He also developed approaches to pair the forecast results with frameworks to answer investor questions on asset values and relative investment opportunities.

In the aftermath of the Global Financial Crisis, Jim provided advice to the Treasury Department and helped educate these professionals on commercial real estate performance. Jim is a member of the Commercial Board of Governors of the Mortgage Bankers Administration, where he helps policy makers understand the commercial real estate industry.

Jim is expanding the capabilities of the Real Capital Analytics team on issues of real estate market dynamics. Jim has a master’s degree in economics and is a member of the Counselors of Real Estate.