Foreign Investors Still in the Game

Article originally posted on HERE on March 11, 2026

Foreign investment into U.S. real estate remains resilient, though over the past year some investors have paused to recalibrate their strategies. Others are sitting on the sidelines amid geopolitical uncertainty, currency fluctuations and shifting return expectations.

Cross-border acquisition volume reached approximately $31 billion, down 11 percent from $34.7 billion in 2025, according to James Nelson, principal & head of U.S. investment sales at Avison Young.

“This pullback reflects global risk concerns, increased investor caution and a weaker U.S. dollar over the last year, all of which contributed to softer international demand,” Nelson said.

“What slows foreign capital down tends to be uncertainty, including higher financing costs, currency volatility, geopolitical risk or policy shifts,” observed Otto Ozen, executive vice president at the Mogharebi Group, a commercial real estate investment and advisory group.

Foreign investors seek stability, outsize returns

The most favored sectors for foreign investors are industrial and multifamily, which comprised 28 percent and 25 percent of all foreign investment last year, respectively. Office and retail continue to draw meaningful interest as well, accounting for roughly 17 percent and 10 percent of foreign investment.

However, capital from every major global region still seems to be finding its way into U.S. assets. “For large institutions managing $50 billion to $100 billion or more, the U.S. market is simply too significant to ignore,” according to Northmarq Managing Director Chinmay Bhatt. “Its depth, transparency and liquidity make it a foundational allocation in most global real estate portfolios.”

There has been, however, a shift by cross-border investors toward specific markets, income durability, downside protection and long‑term fundamentals, noted Mollie Fadule, chief financial & investment officer at multifamily development firm JPI.

“While higher interest rates and geopolitical uncertainty created friction in 2023–2024, improving visibility around rates, a slowdown in new construction and relative pricing adjustments have helped us to re-engage with foreign capital,” Fadule said.

Some investors are selectively exiting assets that no longer fit their strategy, she added, while others are entering or re‑entering the market at today’s pricing levels.

But cross-border investment in U.S. real estate has declined overall in recent years due to high interest rates, volatility in governmental and regulatory policies and trade politics, noted William Shanahan, chairman of capital markets for CBRE.

Will 2026 see a boost in foreign investment?

“Based on our recent Investor Intentions Survey, we anticipate improved cross-border investment volumes this year,” he said, pointing to, among other factors, declining interest rates, a constructive lending environment, pricing and basis resets focused on cash flow growth over appreciation, and a perceived less volatile regulatory environment.

In 2025, Canada led U.S. inbound multifamily cross-border investment with $1.6 billion invested, which represented 28 percent of total foreign capital invested in multifamily, but this was 67 percent less than Canadian investment in 2024 due to trade and policy uncertainty, Shanahan noted.

Japan was the second-largest buyer, investing $991 million, or 18 percent of the total invested in U.S. multifamily assets—a 117 percent increase year-over-year, followed by the U.K. with $693 million invested, or 13 percent of the total.

Among specific entities, the biggest multifamily investments last year were by Canadian firms Brookfield and QuadReal, London’s GSA Group, Investcorp from Bahrain and Australia’s Macquarie Group, according to Nelson.

Respondents to a sentiment survey conducted by the Association of Foreign Investors in Real Estate in December 2025 indicated that continued performance, technological innovation and global connectivity of America’s coastal gateway markets constitute an “inexorable point of appeal for ongoing global investment into the United States.”

AFIRE respondents considered the U.S. the safest real estate investment market in the world but also rated Canada, the U.K., Europe and Australia as “very safe.”

Unpredictability still a concern

Despite the general optimism, respondents are aware of the current risks for U.S. investments. Nearly 45 percent of AFIRE respondents, for example, indicated a likelihood of adjusting their U.S. real estate investment strategies over the next 12 months as a result of the evolving and increasingly unpredictable U.S. financial and regulatory landscape.

About two-thirds of respondents indicated no plans of divesting of current U.S. real estate assets over the next three years, and those indicating plans to increase U.S. investment in 2026 cited stable returns as the leading criterion.

In addition, the 35 percent of respondents planning to divest of U.S. assets indicated that they will invest in non-U.S. markets, citing diversification, rebalancing their portfolios and the search for stable returns as the leading reasons for this change in strategy.

Why foreign institutions bank on multifamily

The majority of foreign investors are institutional entities, including pension funds, banks, insurance companies, sovereign‑linked entities and large private investment platforms. But some family office and private capital are also active, often alongside institutional partners, according to Fadule.

Institutional investors drove nearly 60 percent of foreign investment in 2025, despite a 26 percent year-over-year decline in their FY 2025 cross-border investment volume, according to CBRE.

“Q4 saw a threefold increase compared to the prior quarter, indicating improved institutional interest,” Shanahan added, noting that private investors contributed 25 percent of foreign capital in 2025, with the balance made up of users and others.

Fadule believes that foreign investors are attracted to the U.S. housing sector for several reasons: long‑term population growth, a chronic housing supply imbalance, liquidity and regulatory transparency.

“Many also value the ability to scale investments across multiple markets for diversification,” Fadule continued, noting most of the interest is in Sun Belt growth markets such as Texas, Florida, other Southeast cities and select Western locations, where job growth, in‑migration and relative affordability support long‑term housing demand.

Housing is viewed as a defensive, durable investment, and multifamily gives investors scale, cash flow and long-term demand support, Ozen explained.

“We can say confidently that foreign investors remain active in underwriting multifamily in the markets we cover,” he added, noting that U.S. housing assets also offer unmatched liquidity. “In many cases, foreign investors are willing to pay a premium for quality and long-term stability, and they often transact above market averages on both price per unit and cap rates.”

Other considerations by foreign investors include economic and legal stability, transparent market structure, strong demographic-driven rental demand and reliable cash flow potential with long-term appreciation, resilient occupancy and institutional scale.

Where foreign investors are placing capital

Gateway markets enjoyed a large share of cross-border investment last year, with the greater New York and Los Angeles markets collectively capturing 26 percent of total foreign investment and demonstrating significant year-over-year growth of 16 percent and 38 percent, respectively, according to Shanahan. The San Francisco Bay Area and Seattle also ranked among the top 10 destinations.

The Sun Belt cities that captured the most foreign investment in 2025 were Orlando, up 580 percent year-over-year, and Charlotte with a 131 percent increase. These stats align with broader investor preferences identified in the CBRE investor sentiment survey.

And while gateway markets remain important, many foreign investors are increasingly comfortable with secondary markets that have strong fundamentals, particularly when partnered with experienced local operators, Fadule said, noting that these markets often offer higher yields, better supply‑demand dynamics and longer‑term growth potential than core markets.

Another notable trend is growing interest by foreign investors in student housing, noted Nelson. In fact, the largest cross-border transaction in 2025 was London-based GSA Group’s acquisition, alongside Morgan Stanley, of an eight-property student-housing portfolio from Landmark Properties. These assets serve major universities, including the University of Virginia, North Carolina State University, Texas A&M, Penn State, the University of Florida and Oregon State University.

How foreign investors are overcoming challenges

The biggest near-term challenge for foreign investors is currency fluctuations, and many investors are using hedging strategies to navigate it, noted Nelson. This might include forward contracts to lock in rates, options that limit downside while keeping upside, and futures to lock in a specific exchange rate. Operational or natural hedging also may be used to match foreign revenues with expenses, and using hedged ETFs is also common to protect margins and international investment returns from adverse exchange rate movements.

Foreign investors are also placing greater emphasis on control, governance rights and asset-level transparency, said Bhatt. “Capital today is more disciplined and more engaged than in prior cycles,” he explained. “We are seeing investors negotiate stronger reporting requirements, clearer decision-making frameworks and, in many cases, enhanced approval rights within joint ventures,” he explained.

That reflects a “more hands-on approach to risk management” and underscores the importance of experienced operators who can provide both performance and transparency.

The uncertain geopolitical landscape and trade policies are also big concerns for cross-border investors, Shanahan said, noting that improving economic conditions and a declining dollar will help offset some of this.

Bhatt also cited “lingering uncertainty around valuations” as a drawback for foreign investors. “Bid-ask spreads have narrowed compared to the peak of the reset, but pricing clarity is still evolving in certain sectors, which can slow decision-making,” he said.

Nelson also warned that slowing rent growth, localized oversupply or political scrutiny tied to housing affordability can temper international appetite for U.S. real estate, particularly in the multifamily sector.

Despite the anticipated headwinds, though, the outlook for foreign investment, especially in multifamily, remains strong. “With homeownership increasingly out of reach for many Americans, rental demand continues to rise, reinforcing solid fundamentals,” Nelson said.

And, Fadule said, as pricing adjusts and fundamentals stabilize, the multifamily sector will provide an attractive risk‑adjusted opportunity for long‑term capital seeking income and inflation protection.