_Mapping the capital superhighways: where investments took place globally in 2017

At the continental level, North America continues to see a greater volume of activity than anywhere else, although the vast majority is from domestic investors, with less than 15% of volume accounted for by purchasers from abroad.

By contrast, more than half of the investment that took place in Europe involved a buyer from a different country. Part of the reason for this is the high volume of cross-border trading that takes place between European countries: intracontinental trade in Europe reached US$65 billion in 2017.

But that is far from the whole story. In particular, it is clear that Asia’s role is growing rapidly, both as a source of outbound capital flows, and as a destination for inward investment. Indeed, both Asia-Pacific investment into Europe and European investment into Asia-Pacific doubled during the year.

In the longer term, we predict the share of overseas investment in Asia-Pacific markets will gradually begin to catch up with that seen in Europe. However, in the short term, so strong is the focus from both Asia-Pacific and North American investors that Europe’s cross-border share could also continue to grow.

Cross-border flows from regions into countries

Where the country of origin is not the same as the country of investment

While much cross-border activity takes place at the intracontinental level (such as wider Asian investment into China or Australia, or Canadian investment into the US), it is also clear that a number of markets have broad appeal to investors across the world. Our view is that this mix of countries will become more diverse over time.

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Cross-border flows from different types of investors

Excluding developments

There is significant variation in the foreign real estate acquired by different types of investors. The approach taken by developers and institutional investors has tended to see them invest consistently in a relatively broad range of established, liquid markets.

A similar mix of markets is also targeted by private equity and sovereign wealth funds, but the difference is that rapid growth in the scale of purchases made by these investors makes the ranking of destinations increasingly volatile from year to year.

Spanish apartments and UK industrial real estate topped their respective lists in 2017 largely due to a few multi-billion dollar platform transactions. Such activity will certainly remain a feature of the global market over the coming years, and will be exacerbated by the high volume of capital inflows that such funds are seeing.