🚨Thirty U.S. states now restrict foreign property ownership, with Texas’ SB 17 taking effect in September. Foreign CRE investment fell below $45 B in 2024, the lowest since 2011, as global allocations retreat. With U.S. debt markets already constrained by a ~4.3% 10Y Treasury, the absence of offshore buyers further narrows exit channels. CRE liquidity will lean increasingly on private credit, family offices, and domestic syndicates.
Foreign CRE investment: <$45 B in 2024 (lowest since 2011) — [Source: AFIRE].
Global investors reducing U.S. allocations: 52% (10% with significant pullback), 2025 survey — [Source: AFIRE].
States with foreign ownership bans: 30 as of Sept 2025 — [Source: PERE].
Loan Performance. Wider exit spreads and muted bid depth heighten DSCR stress at maturity; owners may need to inject equity or refinance at higher coupons.
Demand Dynamics. Gateway trophy assets face weaker auction depth; domestic buyers step in but at slower absorption and wider pricing discounts.
Asset Strategies. Marketing timelines extend by 60–90 days; repositioning and TI packages must be sequenced for U.S. capital pools.
Capital Markets. Syndicate equity and family offices replace offshore bids; CMBS spreads risk widening as foreign demand for bonds also falls.
Liquidity loss compounds rate-driven stress.
Trophy/gateway assets most exposed to foreign buyer retreat.
Domestic syndicates favored in auctions.
Wider CMBS spreads likely without foreign participation.
🛠 Operator’s Lens
Refi. Build in cap rate cushions (+50 bps) and longer remarketing assumptions.
Value-Add. Tie capex plans to domestic capital commitments.
Development. Recast exit strategies toward U.S. syndicates/1031 buyers.
Lender POV. Banks wary of liquidity risk in foreign-reliant metros; CMBS tone softens.
Additional state bans likely in 2025.
Potential constitutional challenges may test restrictions.
Fed easing in 2026 could re-open selective foreign inflows.
PERE — “State-Level Bans Cut Foreign Investment Share in U.S. Property” (Oct 1, 2025). AFIRE — Annual Survey Report (2025).
