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High Net Worth Individuals account for 25% of all global commercial property transactions – with £178 billion invested in 2015

Posted On Tuesday, 15 March 2016 13:18 Published by
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Commercial property is no more a ‘Cinderella’ asset class for UHNWI’s as they now account for 25% of global commercial property investment volumes investing $902 billion into the sector since the current cycle commenced in 2009.


Private Wealth investors have become far more sophisticated and considered, and are not just ‘hunting’ for trophy assets – they view commercial property as tangible, controllable, not subject to daily pricing and giving real performance relative to other asset classes. 

In 2015 a total of $178 billion was invested, with $52 billion in Europe and $16 billion in the UK alone – three times more than seen in France and a third more than in Germany. Hotels led the way as the most popular sector for investment, being a well understood market for Middle Eastern and Asian Private Wealth. The experience, familiarity and hence confidence of Private Wealth, in having a long term association as either operators, investors or both, has continued to drive private investment into the hotels asset class.

North America had the highest concentration of private investment of the world’s major regions during 2015 - of all the commercial real estate investment into the continent during 2015, 32.3% of it was from private investors. The increase of inbound capital from Chinese and Middle Eastern investors has been a noticeable, contributing factor.

Moving forward Private Wealth investment will continue to thrive, with 23% of Knight Frank’s Attitude Survey participants maintaining that there will be a large increase of commercial property allocation over the next ten years.  A diversification across the asset class, into a broader range of markets beyond London, Paris, New York etc, will occur with increased interest in specialist sectors, such as Healthcare and Student Accommodation for example.

The creation of joint ventures and a maturity of approach to investment will occur as they continue to compete against the wall of money coming from institutional funds.

Deborah Watt, partner, Private Client Advisory Team, Knight Frank, commented: “UNHW investors are more focused on performance than trophy buys.  They want to add value to their portfolio and are looking for strong cash on cash returns.  It’s now as likely that a UHNWI will buy a luxury retail unit on Bond Street as an office investment in Birmingham.”

Lee Elliott, Head of Commercial Research, Knight Frank, commented; “Private investors are now well established as a bed-rock of the commercial real estate market.  Since 2009 they have represented $1 of every $4 invested in the commercial market.  We expect private investors to develop stronger infrastructure and more diverse strategies as they participate in a hugely competitive marketplace.”

Last modified on Tuesday, 15 March 2016 15:54
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