A common question I’ve been asked, both internally and externally, over the last two months is how have the US tariff announcements affected cross-border investor sentiment and, more specifically, if the US has been classified as too risky a destination for deployment into real estate, given recent uncertainty?

US remains a strong destination for capital

The short answer is no. Anecdotally, very few experienced investors have pulled back from the US as a result of the tariff announcements and upheaval, or are considering doing so. The size and range of opportunities in the US market make it impossible to ignore, even in times of uncertainty given according to MSCI’s Real Estate Markt Size report it accounts for around 40% of the global market for professionally-managed real estate. Potentially, buyers may exercise slightly more caution and take longer to scrutinise the fundamentals of an asset, but if they’re solid than they should theoretically still proceed.

We’re currently seeing strengthening occupier demand for some forms of US retail and offices, with, if anything, recent uncertainty probably slowing development activity and therefore supporting further income growth, which is helping underwriting.  Additionally, we shouldn’t forget the rationale – if not the current outcome – behind President Trump’s economic policies: he is aiming to strengthen US manufacturing and the domestic economy. If, mid- to long-term, he is successful, there should be substantial up-side for holders of US real estate assets. Even with the recent tariff upheaval, the US economy is still forecast by the IMF and OECD to see stronger growth than most other major real estate markets, with labour market data also holding up well.

However, if you are motivated to redeploy based on uncertainty in the US, this begs the question:  where are you going to move this capital to; where in the world is not facing some economic uncertainty at the moment? Realistically, very few places, although the EU, UK and Australia are generally considered ‘calmer’. Countries remain very much intertwined in this globalised world, and nowhere is completely immune from economic contagion if the US suffers.

Diversification, not desertion

So, wholesale withdrawal from the US is unlikely. What is far more likely, and anecdotally we are seeing some evidence of, is diversification to other markets. A lot of institutional capital tends to be overweight investment in the US anyway, not just in real estate but also in US equities and fixed income, and so some may see now as an opportune moment to rebalance.

So, in short, diversification not desertion is the probable order of the day. Investors will continue to look to the long-term benefits of the US, and those that are hesitant to deploy anyway, will continue to exercise even more caution until some stability is restored. What this does mean, however, is that the period of caution that gripped global real estate capital markets in 2023 and 2024, and which we saw some signs of shifting in Q4 of last year, and Q1 of this, looks set to be prolonged even further.

Further information

Contact Rasheed Hassan

Savills Takes Stock: Global Real Estate Capital Markets Q1 2025