_Private investors lead the charge in commercial real estate investment

2022 was the second strongest year on record for commercial real estate investment volumes amongst private investors, capitalising on repriced assets and favourable currency positions

March 07, 2023

Singapore – According to The Wealth Report, Knight Frank’s flagship report, private investors were the most active buyers in global commercial real estate investment in 2022, accounting for 41% of the total investment. Multifamily residential – or private rented sector (PRS) was the investment of choice, followed by offices and industrial and logistics combined.

Asia-Pacific’s (APAC), High Net Worth Individual’s (HNWI) allocation to commercial investment increased over 30% year-on-year (YoY) in 2022, accounting for over US$1.53 billion in commercial property investment – a significant uptick amidst a broader decline in investment volumes across the Asia-Pacific region, which decreased by 21.3% in 2022.

Neil Brookes, Global Head of Capital Markets at Knight Frank, commented: "The ongoing repricing of assets and the stronger currency positions have allowed private investors to continue their dominance in the market. With debt set to be a key factor for all investors in the year ahead, private clients are well-positioned to take advantage of opportunities as they are typically less reliant on debt with ample cash reserves to secure prime assets quickly.”

Despite the expected persistence of macroeconomic challenges in many global locations, Knight Frank's High-Net-Worth (HNW) Pulse Survey indicates that property holdings are likely to increase. 19% of HNWIs intend to invest directly in commercial property, with 13% set to take the indirect route. Healthcare-related assets topped the wish list for HNWIs in 2023 (35%).

While APAC HNWIs responded similarly to their global peers in the aforementioned questions, they are more optimistic about commercial property investment than their global peers.

32% of APAC HNWI plan to increase allocations to commercial property (global average is 28%)
Although inflation will be a significant factor influencing investment decisions in 2023, 26% of APAC HNWIs responded that it will not influence their investment decisions at all (global average is 20%)
43% of APAC HNWI indicated that capital appreciation is their biggest goal for wealth in 2023 (global average is 31%)

Christine Li, Head of Research, Asia-Pacific at Knight Frank, said: "The inflation pressures in APAC remain more moderate compared to global markets, as most central banks in the region have pursued prudent monetary policies and maintained fiscal discipline. In addition, the expectation that APAC will lead the economic growth in 2023, has resulted in a more nuanced landscape emerging in this region.”

In terms of how much HNWIs are considering investing in commercial property, 54% of global respondents are seeking opportunities under US$1 million. Although 11% responded to looking to complete a transaction of US$20 million or more, this figure jumps to 20% for investors from the Chinese mainland and 17% for those from Singapore.

NB: Private investors and private capital refer to investment from family office, private individuals and privately held companies.

Total global commercial real estate investment in 2022: $1.12 trillion.

* Source: RCA Data

For further information, please contact:
Janita Kumar, Global PR Commercial Manager, Asia-Pacific
janita.kumar@asia.knightfrank.com

_Private investors lead the charge in commercial real estate investment

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