Investment flows in the global market
Last year, a significant increase in foreign investment was noted in several real estate markets. More and more investors are investing in real estate abroad in order to diversify their investment portfolios and protect their wealth from risks at home. Tranio experts analyzed cross-border transactions made on the world market in 2016 and examined the preferences of the largest groups of investors.
Real estate transactions in the global market
According to the analysis of the largest markets by Tranio, in 2016 the total volume of cross-border real estate transactions amounted to 426.8 billion dollars. At the same time, cross-border investments in commercial real estate reached 188.4 billion dollars, 238.4 billion dollars were invested in housing.
Top 10 real estate markets in terms of foreign investment
* Calculations are based on data from Knight Frank, Cushman & Wakefield, Savills, Colliers, CBRE, Real Capital Analytics, and statistical agencies of countries
As we thought
Tranio analysts calculated the amount of cross-border purchases in the commercial and residential real estate markets by comparing quantitative data from Knight Frank, Cushman & Wakefield, Savills, Colliers, CBRE, Real Capital Analytics and statistical agencies of the countries. In cases where the data were insufficient or different, we calculated the volume of foreign investment by finding the product of total investment and the share of foreign investment in total investment (or corresponding approximate values) and comparing the result with the corresponding estimates, in many cases using the calculation weighted average. The calculations do not take into account small markets, and in most cases when evaluating commercial real estate markets, transactions amounting to less than $ 10 million, and therefore the total total investment exceeds $ 426.8 billion.
The largest in terms of cross-border real estate transactions was the US market, where in 2016 foreigners spent a total of $ 149 billion – $ 48.5 billion to buy commercial and $ 100.5 billion – to buy residential real estate. In the US, foreign buyers made about 11% of transactions in the commercial real estate market and even less in the housing market.
The second place was taken by the UK with $ 86.1 billion, of which $ 33.1 billion fell to commercial and 53 billion – to residential real estate. In the UK commercial real estate market, foreigners make up about 57% of buyers.
In Germany, where the volume of cross-border real estate purchases amounted to only $ 25.8 billion, most of the funds received ($ 22.7 billion) were invested in commercial real estate and a relatively small part of them ($ 3.075 billion) in housing. In 2016, the volume of foreign investment transactions in the commercial real estate segment was 40%. In Germany, as in the United States, local buyers dominate the market. In addition, Germany was ahead of the UK, becoming the largest national market in Europe, and Berlin, Hamburg, Frankfurt and Munich were among the largest local markets.
France (25.1 billion dollars), Canada (21.4 billion dollars), Spain (20.2 billion dollars), Italy (16.3 billion dollars), South Korea (13.8 billion dollars) , Australia ($ 13.1 billion) and Singapore ($ 11.3 billion) also entered our list of leading countries in terms of the volume of real estate transactions made by foreigners in 2016. Immediately after Singapore follow the Netherlands, where the volume of such transactions amounted to 10.5 billion dollars.
Foreign investors investing in commercial real estate were quite active in markets such as Ireland (72% of all transactions), the Czech Republic (70%), the Netherlands (62%), Italy (62%), Spain (60%) and the United Kingdom. According to our estimates, in Singapore (25% of the total volume of transactions) and Spain (13%) the share of the presence of foreign investors in the residential real estate segment was the largest. The average and median values of the ratio of foreign investment in commercial and residential real estate are 1.63 and 0.63, respectively. At the same time, the only countries out of the general range are Germany and Australia, where investments in commercial real estate far exceed investments in housing.
Where do real estate investments come from?
In 2016, China was the ascendant outbound investment source in Asia
In 2016, China became the main source of overseas investment from the Asian region, ahead of Singapore
Among the largest and most important groups of foreign investors in the global real estate market are citizens of Asia and the Persian Gulf, the United Kingdom and the United States. Notable players in foreign real estate markets are also Russians.
The main Asian investment countries are China, Singapore, Hong Kong, South Korea and Japan. About 85% of investments from China accounted for office and hotel real estate, while Singapore was more diverse in this respect: its investment portfolio ($ 12 billion) included office, hotel, industrial, commercial, residential real estate, and mixed-use objects.