Wealthy private investors up their stake in CRE

Wealthy private investors are increasing their share of total investment in global commercial property, according to Knight Frank’s Wealth Report 2019.

Responses to the annual survey, from 700 ultra-high-net-worth investors and family offices, showed that private investors increased their global commercial property portfolios to $289 bn (€258 bn) last year.

Equating to a 31% market share, this represents a higher proportion of the total invested by all types of investors worldwide in property last year, which remained relatively flat at $907 bn (€809 bn).

Private investment in commercial property has been rising since 2010, and 21% said this time that they plan to invest in commercial real estate in another country. Last year Asian private investors overtook US investors as the biggest exporters of capital internationally.

UK commercial real estate is the most popular destination for cross-border transactions by private capital with $8bn (€7.1 bn) invested in the 12 months to Q3 2018, with US second (€6.6 bn) and Germany third (€3.6 bn). The Netherlands was fifth and France eighth.

In Europe, private investors have been active across the market, from big prime deals in gateway cities, such as Zara’s founder Amancio Ortega buying the Adelphi office building in central London for £550 mln (€643 mln) from Blackstone, to a broader range of assets and smaller deals.

In the last week, for example, the Qcoon family office paid €36 mln for a Mannheim development site in Germany for 250 apartments and offices, while London-based family office Flemyn bought the PwC Tower in Rotterdam from Amundi for c€38 mln.

William Matthews, Knight Frank’s head of commercial research, said: ‘Some investors will need to move up the risk curve in search of returns as a way of tackling the competition, which means taking a more hands-on approach.’

Liam Bailey, head of residential research, said that a new UHNW investor ‘is created every hour with the world seeing 43,000 more by 2023’. While a fifth of the growth is in the US, Germany has more than China.

London remained the leading global wealth centre in Knight Frank’s City Wealth Index.


This article first appeared in EuroProperty, PropertyEU's sister publication.


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