Global investors are increasingly looking to Boston for investment opportunities, which is driving costs up even if they never actually close a deal.

New York and Los Angeles remain the top two U.S. cities for foreign investors, but Boston has jumped into third place this year after being tied with Seattle for fifth in 2016, according to the Association of Foreign Investors in Real Estate.

“[Foreign investors] are certainly expanding the pool of buyers, which necessarily puts upward pressure on pricing, despite whether they emerge as the eventual owners,” Perry Brokerage Director of Intelligence Brendan Carroll said. “Foreign buyers review and/or make offers on nearly every mid- and large-size asset in the region’s core investment areas.”

The 242-room Godfrey Hotel in Downtown Crossing had not even opened when it sold to German investment group Union Investment for $173.9M. The $719K-per-room sale/leaseback deal with Oxford Capital Group is among the highest prices ever paid for a hotel in Boston. The Millennium Tower in Downtown Crossing has also seen a high number of international buyers, including Irish billionaire John Grayken’s $35M purchase of the tower’s Grand Penthouse.

While foreign parties have increasingly bid for assets in the city, the percentage of those actually acquired by non-American entities has not shown a long-term increasing trend. Foreign buyers accounted for 36% of office sales in Boston in 2014, and the number has steadily decreased, down to 20% at the end of 2016, Carroll said.

2017 has been more robust and seen a boost in foreign buyers closing deals. Deutsche Bank’s purchase of Goodwin’s 100 Northern Ave. office building in the Seaport, Israeli fund Alony Hetz's purchase of Hubspot’s Cambridge headquarters and Japan-based Mori Trust’s acquisition of 10 St. James Ave. and 75 Arlington St. in Back Bay have totaled $1.3B in value, accounting for 41% of year-to-date investment in the market.

“The Israeli and Japanese buyers, combined with the purchase of 311 Summer St. in 2016 by a Qatari buyer, extend a trend of investment capital coming from sources with newly established direct air service from Boston,” Carroll said.

Over the past decade, international service to Boston’s Logan Airport has nearly doubled from 27 to 53 destinations, and companies like General Electric have cited the growth as motivation to move into the city.

Direct air service allows buyers to more conveniently evaluate investments and monitor asset performance over time, Carroll said. At the April announcement of Avianca’s new non-stop flight from Boston to Bogota, Colombia, Gov. Charlie Baker said new international flights from Logan accounted for over $1B in economic benefit to the region each year.

A mix of European and Asian capital is focused on urban development, Newmark Knight Frank Vice Chairman of Capital Markets Edward Maher Jr. said. German and Japanese concerns are focused on income-generating assets, while Korean and Chinese investors show they are willing to take on riskier investments with new development. The $500M redevelopment partnership at Pier 4 in the Seaport between Tishman Speyer and two Chinese insurance companies is the largest Chinese investment to date in Boston.

The U.S. continues to rank globally as the most stable country for real estate investment and the one to provide the most opportunity for capital growth, according to AFIRE. Continued economic growth, a strong legal system and general investment security in the U.S. are all enticing for foreign investors. Despite the optimism, there are still areas of concern.

“As uncertainty rises with a new government in Washington and interest rates that have risen dramatically, it is no surprise that investors have signaled a note of caution,” AFIRE CEO James Fetgatter said in a statement.

A third of the respondents in the AFIRE survey said their outlook on the U.S. market had become more pessimistic while only 6% had become more optimistic since 2016.