Foreign direct investment in the U.S. soared under the Biden administration to its highest level on record, according to an analysis by the Financial Times-owned company fDI Markets. Commercial real estate is one beneficiary.
In 2024 alone, in the year through November, the share of global FDI flowing into the US. in the form of new investment rose to 14.3% from 11.6% in 2023. as a proportion of the world total, the Financial Times reported.
Experts cited in the report attributed the boom to strong consumer demand and government incentives, along with strong productivity growth. The country’s strength in AI was another factor.
The Biden administration’s domestic content requirements for goods manufactured in the U.S. also encouraged foreign direct investment from companies hoping to enter the American market. Related domestic content requirements were also introduced for infrastructure projects. In addition, the CHIPS Act authorized some $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States, attracting investment from companies like Taiwan’s TSMC.
The U.S. sectors that saw the greatest foreign interest were semiconductors, industrial equipment, construction, electronic components, renewable energy, and aerospace.
In total, more than 2,100 new foreign greenfield projects were launched in the year through November 2024, with a value of $227 billion compared to $100 billion the previous year, fDI Markets calculated. By comparison, China attracted 400 FDI investments. In the same period, FDI in Germany fell sharply, and inflow to Europe was harmed by the Russian invasion of Ukraine that caused energy prices to spike, the report said.
The U.S. is expected to maintain its lead in the year ahead. The report cited an IMF study predicting that the U.S. would grow by 2.7% this year, compared to 1% in the Eurozone. Multinationals trying to hedge supply risks will bolster this trend. Reshoring of strategic industries like microchips and healthcare is expected to continue along with “friendshoring” of goods companies don’t plan to produce in the U.S.
By region of origin, Western Europe (62%) was the dominant source of FDI into the U.S. However, outbound FDI from the U.S. fell to just 2,600 projects – their lowest level in two decades if the pandemic is excluded, the report stated.
Among the beneficiaries of foreign investment in the U.S. is CRE, as earlier reported by GlobeSt.com Foreign CRE Investors Poised for 2025 Comeback. The GlobeSt.com report found that major foreign CRE investment funds are preparing to get back in the U.S. market after a prolonged pause. The new attention is spurred by the Fed’s lowering of interest rates. In addition to making capital easier to come by, investors believe the action could also lower the dollar exchange rate.
Investors are especially focused on quality assets in diverse locations, including new buildings with reliable tenants and longer leases. Multifamily is among the sectors drawing attention. Interest in investing in debt and distressed assets is growing.
Foreign investors are also said to be investigating cities outside the gateway markets like New York, Boston, Washington, DC and San Francisco. Denver, Phoenix, San Diego and Nashville are now in the mix. Climate risk – including rising insurance rates in the Southeast and Gulf Coast – is also factoring into geographic decisions, GlobeSt.com reported.