US was capital magnet in 2015 despite global slowdown

Commercial property transactions totalled $1.2 trillion in 2015, down 2 percent from 2014, according to the latest Global Capital Trends report from Real Capital Analytics.

However, while Asia slowed significantly, the US surged forward with transaction volume reaching a record high in the fourth quarter of $135.5 billion. The US total of just over $440 billion in 2015 represented a year-over-year increase of 28 percent.

In the fourth quarter, Asia declined 27 percent to $35 billion and Europe was down 16 percent to just over $77 billion.

The fall in Asia towards the end of the year was attributed to anxiety over China and the Middle East and the declining oil price. But rather than being hidden under the mattress, Asian money instead poured into other markets, accounting for 29 percent of all cross-border capital flows in 2015 compared with 5 percent in 2007.

On the face of it, Europe experienced a fairly flat year, with a 3 percent increase in volume based on the report’s US dollar denomination. However, if measured in terms of the euro, volume rose 23 percent – equivalent to a 20 percent foreign exchange impact.

While the headline global number was slightly down last year, cross-border capital flows increased with cross-border transactions representing $289 billion of the $1.2 billion total (an increase on the previous year of 28 percent). While much comment has focused on Chinese buyers, the report found a diverse range of cross-border capital flows emanating from across Asia and globally.

The biggest single capital flow, as in previous years, was from the US to the UK. However, the big mover was the flow of capital from Singapore to the US, which rose from being the 24^th-biggest capital flow in 2014 to second last year. The Gulf countries to the US moved up from 18^th two years ago to third last year.

Of the top ten capital flows in 2014, only two were to the US. Last year, four of the top ten had the US as their target.