The strong US dollar drove global property investments up 18% year-on-year to US$56.6 billion in the first half of 2022, with Europe and the office sector proving to be a particular lure, according to CBRE Group Inc.
The dollar has appreciated against major currencies as the Federal Reserve hikes interest rates to battle inflation, making it cheaper for US investors to buy foreign assets.
The greenback gained 7.9% against the euro and almost 18% against the Japanese yen in the six months to June.
The office sector attracted almost half of the global property investments across Asia Pacific, Europe and North America, CBRE says in a report on September 21.
US investors were keen to take advantage of the strong dollar to snap up European assets. Inflows into the European office sector surged 127% in the six months to June compared to a year ago, and was 54% higher than the five-year pre-pandemic average, the report says.
According to Richard Barkham, CBRE’s global chief economist, current trends indicate that cross-regional commercial real estate investment will remain strong in the near term.
“Asia Pacific and North American investors likely will remain particularly active, especially as pandemic-era travel restrictions have almost entirely been lifted,” he says in the report. “A return to pre-pandemic levels of investment originating from the Middle East would further bolster the global investment market.”
He expects the euro’s decline below parity against the dollar early in the second half of 2022 to further attract US investors.