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.
A significant US$455 bn (€429 bn) was invested, accounting for 41% of the total, according to the global property consultancy’s capital flows tracker.
This represents private investors highest share of global commercial real estate on record and is the first-time private investment has surpassed institutional investment.
Institutions invested a total of US$440 bn in 2022, 28% below 2021 volumes, but 2% above the 10-year average. By comparison, whilst private capital investment was down 8% from its all-time high of US$493 bn in 2021, 2022 was still the second strongest year in history sitting 62% above the 10-year average.
Multifamily residential – or private rented sector (PRS) was the investment of choice with US$194.9 bn invested into this sector, followed by offices and industrial and logistics combined.
The US, UK, Germany, Canada and France were the top destinations for private capital in 2022. However, of the top 10 destinations, the UK (+1%) and France (+21%) were the only countries to see year-on-year increases in investment from private sources.
The US (US$302 bn), Canada, France, Germany and the UK made up the top five sources of private investment, with private capital from France increasing investment by 27% in 2022.
Paris and London leading in Europe
US cities remained a target for private investors in 2022, with US metropolises accounting for 67% of total private investment.
Paris was the only city outside of the US to feature in the top 10. Although eleventh overall (cross-border and domestic) in 2022, London was the top performing city for cross-border private capital with US$2.5 bn invested.
Overall, this accounted for 44% of the total private capital investment into the city and 15% of total global cross-border private buyer investment into cities in 2022.
Alex James, head of private client advisory at Knight Frank, commented: 'Private buyers are taking advantage of the ongoing repricing of assets and stronger currency positions, which has given them a competitive advantage against large institutions who are more sensitive to debt and often have shorter-term investment horizons.
'Residential is generally the entry point into the sector for ultra-high-net-worth individuals, but a larger weight of private capital is targeting commercial property given attractive pricing and stable income from well-located assets with tenants on long-term leases.
'This trend is set to continue with private investors seeking liquid, wealth preservation options in the current inflationary environment and investment grade commercial real estate with a strong occupier and sustainability profiles will become a more prominent part of global portfolios.'
