CBRE reports that global real estate capital flows showed significant growth in the second half of 2024, pointing to an ongoing market recovery. 

Total cross-regional capital flows to North America, Europe, and Asia-Pacific increased by 31% year-over-year to $US37 billion, marking the highest half-year total since H2 2022. Although considerably lower than the peak of US$88.5 billion in H2 2021, this increase suggests the global market recovery is well underway.

The industrial & logistics sector attracted the most cross-regional investment for the fourth consecutive half-year period, holding a record 47% share. The office sector also experienced a marked recovery, with a 50% year-over-year increase in cross-regional volume. Conversely, retail and multifamily cross-regional investment volumes remained stable, while hotel investments decreased slightly.

Regarding regional specifics, U.S. total inflows in H2 2024 increased by 40% year-over-year to US$9 billion, with a particular interest in prime industrial & logistics and office assets in key markets such as New York, Boston, and San Francisco. Europe, the largest recipient of cross-regional investment, reported a 10% year-over-year increase in cross-regional inflows. Meanwhile, cross-regional inflows to Asia-Pacific grew by a staggering 221% year-over-year in H2 2024 to US$6.3 billion, largely driven by North American investors active in Australia and Japan.

However, the global economy faces certain challenges. Long-term government bond yields remain high, particularly in the U.K. and U.S., which might limit cap rate compression. Despite this, investment volume increases are expected this year, with predictions of 8% for the U.S., 15% to 20% for Europe, and 5% to 10% for Asia-Pacific.

In North America, cross-regional investment increased by 40% year-over-year to US$9 billion in H2 2024, primarily driven by European investors. However, investment activity may be muted in the first half of 2025 due to relatively high long-term bond yields.

In Europe, cross-regional capital inflows increased by 10% year-over-year to US$21.63 billion in H2 2024, following the European Central Bank’s initiation of an interest-rate-cutting cycle. Despite political uncertainties in certain regions, the investment outlook for Europe in 2025 is positive, with further interest rate cuts expected.

Asia-Pacific reported a surge in cross-regional inflows by 221% year-over-year in H2 2024 to US$6.3 billion. North American capital inflows, particularly from U.S.-based fund managers, primarily targeted Japan. The region expects to see increased investment activity in 2025 despite macroeconomic uncertainties.

Looking ahead, cross-border capital flows are projected to further increase in 2025 as interest rates continue to fall and market fundamentals improve. However, downside risks remain due to elevated long-term bond yields, potential tariffs, and geopolitical uncertainties. Nevertheless, global real estate investment volumes are expected to increase 11% this year.

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