Is International Investment Moving Out Of Cities?

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International investors have long been major players in US-based development, particularly in luxury industries. More recently, though, these investments have become less lucrative and international funders have turned reticent, concluding that these properties may not be the best use of their funds. For the first time since 2012, international investors registered more commercial real estate sales than acquisitions, at least by a small margin; in the first half of 2019, international investors made $21.4 billion in sales, compared to $21.3 billion in acquisitions.

While they’re pulling back from major urban investments, all’s not lost on the international front. Rather than investing in widely fluctuating urban markets, international investors are taking their money to more stable pastures – out of the city and into more rural markets. Combining their knowledge and experience of operating in urban markets with shifts to the EB-5 Visa process, these real estate investors are moving to cultivate passive income in less populous regions.

Thinking Beyond The City

Why would international investors move outside of the urban center? Isn’t that where all the money is? Theoretically, yes – but it’s not as though they’re leaving entirely. These investors have spent years building their urban portfolios. For example, according to, Miami has been one of the most important international investment sites over the last decade; 45% of visitors are from international destinations and it ranks third in foreign direct investments. A few rocky months or even years can’t undo that kind of work; slowing overall investments in urban areas means that investors can focus more attention on what properties they do have there.

All this is to say that, while investment patterns are changing, the urban development isn’t over. What’s going to be different about the next wave of investment, though, is how new international players approach the process. In addition to overall economic change, new investors are moving to rural areas because of changes to the EB-5 Visa program. The EB-5 program is designed to create jobs by funneling international investments into target employment areas. Recently, though, the government increased the investment required for an EB-5 Visa. That alone might not be enough to shift investments out of the city, but the program also made it less expensive overall to invest in high-unemployment areas, many of which are rural.

Will Investment Decline?

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Moving into rural areas may decrease the overall number of investors – as of 2015, only 3% of EB-5 money went to rural areas – but it’s also worth noting that this isn’t all about development. EB-5 Visa holders prefer urban areas because they think urban projects are of higher quality, but they also enter into the program as part of a move towards citizenship. EB-5 investors can apply for citizenship after five years, making it one of the fastest routes to becoming a US citizen. For investors with the money to pour into development – whether that’s urban or rural – the location doesn’t really matter, not when citizenship is the goal. That’s where their investment has to go, but they don’t have to follow it, in terms of their own place of residence.

Cities and investors are allied against changes to the EB-5 program, but at this point, it’s too late. Targeted employment areas are moving into rural regions and the money will follow. After those initial funds buy investors entry into the country, though, their money can go wherever they want. In the end, cities won’t really lose out but will need to rethink how they develop new projects.