Global Capital and Alternative Assets Reshape U.S. Real Estate

As affordability concerns, elevated mortgage rates, and a domestic market slowdown weigh heavily on the U.S. housing sector, an unexpected source of vitality is taking centre stage. Foreign investment is quietly but steadily reshaping the contours of American real estate. Between April 2024 and March 2025, international buyers poured $56 billion into existing U.S. homes, marking a 33.2% year-over-year increase. The number of transactions surged by 44%, reaching 78,100 purchases. This wave of global capital is playing a pivotal role in stabilizing a market where American buyers are increasingly sidelined by prohibitively high borrowing costs and limited affordability.

The New Geography of International Investment

The renewed interest from overseas isn’t a statistical fluke; it signals a deeper realignment of global financial flows. For many investors, U.S. real estate has regained its status as a safe and growth-oriented asset class. Florida continues to top the list as the most sought-after destination, representing 21% of international acquisitions. Close behind are California, Texas, and New York, longstanding economic powerhouses now experiencing an infusion of foreign capital. The bulk of this investment is coming from buyers in China, Canada, and Mexico, which together account for more than a third of all cross-border transactions.

Cash-Heavy Buyers Seek Long-Term Value

What sets this new wave of international investment apart is the decisiveness with which these buyers are entering the market. Nearly half, 47%, of all foreign buyers paid for homes entirely in cash, in sharp contrast to just 28% of all U.S. buyers. This not only reflects their confidence in the enduring value of American real estate but also highlights a strategy to bypass high interest rates. These buyers are also setting their sights higher on the pricing scale. The median price for homes purchased by international buyers has climbed to $494,400, a 4.1% increase over the previous year, underscoring their appetite for premium properties that promise both resilience and appreciation.

A Quiet Revolution in Real Estate Priorities

While luxury homes often capture headlines, the most transformative developments are unfolding in alternative real estate sectors. Once considered niche, segments like data centres, senior housing, life sciences campuses, and industrial storage facilities are rapidly gaining traction. These asset classes are no longer fringe options, they are becoming central to the strategies of global investors recalibrating their portfolios for long-term sustainability and growth.

The Rise of Alternatives and the Shift in Capital Allocation

According to projections from the Deloitte Centre for Financial Services, alternative real estate assets are set to expand at a compound annual growth rate of 15% through 2034, eventually comprising nearly 70% of industry portfolio values. This dramatic shift is fueled by a confluence of forces: advancing technology, changing demographics, and a redefined understanding of asset utility. The tech revolution—particularly AI and 5G, is creating insatiable demand for data infrastructure, prompting firms like Principal Asset Management to raise billions for hyperscale data centre projects. Meanwhile, the country’s rapidly ageing population is turning senior housing into a strategic investment frontier. AEW Capital Management has identified this sector as rich with "demand drivers" and "attractive returns" due to the expected growth of the 75+ demographic, which is forecast to reach 40 million by 2040.

A New Generation of Investors is Leading the Charge

The changing face of investment is not just institutional, it is generational. Younger investors under the age of 40 are displaying a stronger preference for alternative assets compared to their older counterparts, as revealed in Deloitte’s 2025 Commercial Real Estate Outlook Survey. This age-driven shift is accelerating the integration of nontraditional sectors into mainstream real estate portfolios and reshaping the definition of what constitutes a core asset.

The Performance Advantage of Alternative Sectors

Performance metrics validate this shift in strategy. Between 2000 and 2024, alternative real estate assets yielded annualized returns of 11.6%, far outpacing the 6.2% posted by traditional core sectors like office and retail. This performance gap has not gone unnoticed. Publicly traded REITs have already shifted half of their holdings into alternative sectors, and private investors are increasingly moving in the same direction, recognizing the superior returns and future-proof potential of these assets.

Global Buyers and Strategic Evolution Keep the Market Alive

Although the domestic housing market shows signs of strain, the influx of international capital and the ascent of alternative real estate sectors are infusing the market with new life. Foreign buyers, often unburdened by financing constraints and driven by long-term outlooks, are stepping in where domestic participants are pulling back. At the same time, the expansion into data-driven, demographic-supported, and tech-aligned real estate segments is offering investors a dynamic pathway to navigate volatility and extract sustainable value.

An Industry at the Crossroads of Innovation and Globalization

The future of U.S. real estate is not one of stagnation but of reinvention. The market is undergoing a structural transformation shaped by global forces and shifting investment paradigms. International demand and alternative sectors are now more than mere supplements, they are central to the industry's evolution. Those attuned to the intersection of capital, technology, and demographic shifts will be the ones to shape the next chapter of real estate success in the United States.