Despite a pullback in Chinese investment, foreign capital is still pouring into the U.S. and, in addition to assets, investors are now turning to debt.

While foreign investors spent a total of $44.7B in property acquisitions in 2017, North American-focused private equity real estate debt funds have skyrocketed over the last three years, hitting a 10-year high of $18.3B in 2017. Two years before, this number sat at $9.9B, NREI reports.

American investors have more recently begun to focus on saving money for commercial real estate debt, but this trend has flowed through to foreign investors as well. In the last 12 to 24 months, investors from Asia, Europe and Canada have shown an increased interest in debt lending in the U.S. market.

The shift can be attributed in part to substantial increases in the cost of real estate, spreads between bid and ask prices and cap rate compressions. Strict regulatory requirements set on banks have contributed to this trend as well, but those regulations have also led to opportunities for debt funds to take on the role of secondary lenders for both acquisitions and development projects, NREI reports.

While more capital is flowing in, it seems not all foreign investment lending is created equal. While properties in areas like Midtown Manhattan are experiencing few issues securing debt capital, higher-risk deals like short-term bridge and construction loans are facing difficulties obtaining loans.