Real estate investors are back on the road

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.

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.”