Global foreign direct investment (FDI) was buoyant in August, with numerous construction projects announced as real estate and data centre projects proliferated, while green energy continued to show strength.
The fDi Index, which tracks foreign investors’ sentiment, stood at 723 points in August, a rise of 21.2% from a year earlier, according to the latest figures from fDi Markets. This is the highest annual increase in the index’s score since May.
Foreign investors announced 865 greenfield FDI projects worldwide in August, down from the 935 projects recorded in July and 970 in both June and May, fDi Markets figures show.
Signs of future company expansion plans were also slightly more subdued in August than recent months. Investor signals – a major component of the fDi Index that gives an early indication of future investment plans – stood at 392. This is down from the all-time high recorded in June, but significantly higher than the 2020 monthly mean average.
Property developers were particularly active in August, announcing cross-border projects worth more than $3.6bn, up by 70% from the same month in 2020.
Ikea’s shopping mall business, Netherlands-based Ingka Holding, is set to open a new retail development to serve domestic consumers in Changsha, China. The project will include 500 apartments and involves an investment of $616m.
Data processing, hosting and related services was the best performing sub-sector in August, with $3.88bn poured into new projects. Australia-based LendLease announced plans to build a $600m hyperscale data centre facility in Tokyo, Japan.
Meanwhile, edge computing start-up Omnillion, based in Toronto, Canada, announced plans to expand its platform and data centres into Argentina, Ireland, Mexico, Taiwan and Ukraine, after raising $25m in its Series A funding round.
“Over a year into the Covid-19 pandemic, digital adoption and consumption are increasing exponentially and still accelerating,” said Omnillion co-founder and chief technology officer Chris Zheng, in a press release.
Canadian R&D drive
Foreign investors also put more than $2.5bn into research and development (R&D) operations in August, up by 159% from the same month of 2020. Canada was by far the largest recipient country of foreign R&D investment, helped by several projects announced by video games and digital content companies.
These included US-based game developer Gearbox Software, which plans to invest C$200m ($158.7m) into a new studio in Montreal, and Walt Disney, which is set to open a new production studio in Vancouver to produce content for its Disney+ streaming platform.
Green energy continued on a tear, with more than $3.3bn deployed by investors towards renewables – 60% of which went to solar projects. However, this was a drop on the more than $5bn-worth of projects announced in August 2020.
PowerChina signed an agreement with the Iraqi government to set up 2 gigawatts of solar power capacity in the Middle Eastern nation, with 750 megawatts planned in its first phase.
Elsewhere, Denmark’s Orsted Energy announced plans to invest over $400m into its Old 300 solar centre project in the US state of Texas, as part of a corporate purchase power agreement with tech giant Microsoft.
“On our journey to 100% renewable energy, we recognise that innovation and collaboration are fundamental in how we fight against climate change,” Adrian Anderson, senior director, renewable energy at Microsoft, said in a statement.
Several emerging markets saw foreign capital expenditure increase in August, compared to a year earlier. India led the way, with foreign investors pledging more than $2.45bn to greenfield projects, while Brazil attracted more than $1.42bn-worth of foreign investment.
US-based investors also shifted their focus to domestic expansion opportunities. Some 289 inter-state projects – domestic investments made by a company based in another US state – were recorded in August, compared with 114 abroad.
This is the highest number of inter-state projects since April 2021, while the proportion of domestic projects made by US investors was at its highest since March 2018.