Lockdown measures and market uncertainty from the COVID-19 pandemic have had an impact on global capital investments to the U.S. multifamily sector in the first half of the year, according to a new report from CBRE. The amount decreased by 49.2% year over year to $3.1 billion.
The volume in the second quarter, the height of stay-at-home orders, fell nearly 80% year over year and accounted for most of the decline in the first half of the year. Some of the factors contributing to the weak second quarter include the limiting of international travel, difficulty in conducting due diligence, and the declines in occupancy and rent levels.
Canada, which has been the perennial leader for inbound capital, accounted for more than half of the international volume, 52%, in the first half. Rounding out the top six with lower volume were Denmark (17%), Israel (12%), Switzerland (6%), the United Kingdom (5%), and Japan (3%).
New York City was the only market with year-over-year growth in global capital, which was primarily the result of two megadeals totaling $827 million.
In terms of the largest buyers, investor managers topped the list with 35% of global investments in U.S. multifamily assets in the first half of the year. The other primary players included institutional buyers accounting for 26% of the share and property companies with 19%.
According to CBRE, global investors also have a preference for large assets. Overwhelmingly, they prefer mid- and high-rise assets over garden-style properties. In addition, nearly half of the cross-border capital into the multifamily sector in the first half was for assets priced at more than $200 million.
Looking ahead, the report noted that “despite less demand from foreign investors due to the current downturn, low hedging costs in the U.S. should help accelerate multifamily sales as deal activity increases.”