Foreign institutional investors are adapting to market headwinds as they grapple with mounting inflation and rising interest rates in the US, according to the latest survey from AFIRE, the association for international real estate investors focused on commercial property here.

AFIRE members comprise 200 organizations across 25 countries, and "all are well aware of the current market challenges," Gunnar Branson, the organization's CEO, writes in an analysis of its latest AFIRE International Investor Survey Summer 2022 Pulse. "They know, for example, that since January 2022, US inflation rose by more than 9%; the Fed hiked interest rates by more than they have in almost thirty years; we crossed a global threshold of more than six million people dead from COVID since the start of the pandemic; supply chains remain in disarray; July 2022 was the 451st consecutive month with temperatures above the twentieth-century average; wildfires have punished countries around the world; water supplies are dwindling to perilous levels in some parts while others are underwater with historic floods. And of course, Russia started a war in Ukraine."

Economic uncertainty is at the forefront, with both US-based and non-US-based investors predicting challenges to dealmaking in both the US and, to a greater degree, in Europe. Foreign investors are more pessimistic than in previous surveys about both regions, but they are more optimistic about the US than Europe. Meanwhile, Branson says, US-based investors are more pessimistic about the "inevitability" of a US recession (92%) compared to foreign investors (67%).