HOUSTON – (By Dale King, Realty News Report) – The coronavirus pandemic significantly impacted another U.S. real estate market, yet Texas still showed resilience amid the downturn.
CBRE’s U.S. Multifamily Inbound Investment Trends report for the first half of 2020 shows that global investment in the U.S. multifamily sector fell 49.2% compared with the first half of 2019. Non-U.S. investors purchased $3.1 billion in multifamily assets during the first six months of 2020.
Despite the decline, Texas markets remained strong. The Dallas/Fort Worth area ranked fifth nationwide with $2.8 billion in inbound global capital. Austin placed ninth with $2.1 billion, and Houston ranked tenth with $2.0 billion.
Rankings reflect cumulative inbound global capital measured from 2015 through the first half of 2020.
“Texas is the only U.S. state with three markets ranked among top global investment markets for multifamily product,” the CBRE study notes.
CBRE attributed the sharp drop in activity in the second quarter of 2020 to global lockdowns and market uncertainty caused by the COVID-19 crisis. Q2 volume plunged nearly 80% year-over-year, driving most of the decline for the first half of the year.
The pandemic disrupted the real estate sector through restrictions on international travel, challenges in conducting due diligence, and declines in occupancy and rent levels during the second quarter.
Canada remained the largest source of inbound multifamily capital, contributing 52% of global investment into U.S. multifamily properties in the first half of 2020. Denmark ranked second with 17%, followed by Israel at 12%, Switzerland at 6%, the United Kingdom at 5%, other countries combined at 6%, and Japan at 3%.
New York City was the lone market to register year-over-year growth in global investment, surging 641%—primarily due to two megadeals totaling $827 million. Other markets saw declines, with Tampa down 28%, Phoenix down 29%, Los Angeles down 55%, and Austin down 69%.
The top 10 U.S. markets for global investment in rental property were: New York, Los Angeles, Atlanta, Washington, D.C., Dallas/Fort Worth, Phoenix, Boston, San Francisco, Austin and Houston.
CBRE also highlighted several key investor trends in the global multifamily market:
- Investment managers were the largest buyer type, accounting for 35% of global investment in U.S. multifamily assets in the first half of 2020. Institutional investors represented 26%, while property companies—public and private developers, owners, operators and asset managers—made up 19%.
- Global investors showed a clear preference for larger, higher-density assets. Nearly half of cross-border capital going to U.S. multifamily in the first half of 2020 targeted assets priced above $200 million. Mid- and high-rise properties accounted for 79% of cross-border investment versus 21% for garden-style properties.
- Although demand from foreign investors dropped during the downturn, relatively low hedging costs in the U.S. are expected to help accelerate multifamily sales as deal activity rebounds.
Oct. 21, 2020 Realty News Report Copyright 2020
File: Texas Multifamily Still Attractive
File: (2) CBRE’s U.S. Multifamily Inbound Investment Trends report. Apartments. Austin. Dallas. Houston. Texas multifamily still attractive. Global investors. Cross-border.
Caption: Austin skyline with Jenga Tower multifamily. Photo credit: Ralph Bivins, Realty News Report. Copyright 2020