Private Investors Emerge as a Global Force
August 1, 2017
Private investors now comprise more than a quarter of all global commercial real estate transactions. Twenty-seven percent of all global commercial property transactions in 2016 involved a private buyer, according to a new report by Knight Frank.
Further, economists “expect that the appetite from private investors for commercial real estate will continue to increase,” according to the report. Within the next two years, 32 percent of ultra-high-net-worth individuals will invest in cross-border real estate deals, the report says.
The U.S. currently possesses the largest regional population of ultra-wealthy investors, but Asia is quickly gaining. (Ultra-wealthy investors are defined as those with $30 million or more in net assets.) Asia has 27,020 fewer ultra-wealthy people than the U.S. But by 2026 that difference is expected to shrink to just 7,068.
Nevertheless, the U.S. is expected to “stay as the largest hub of ultra-wealthy investors in 2026 and growth will continue to outstrip many other developed economies,” according to the report.
The number of global billionaires overall has increased 45 percent in the past decade to 2,024, according to the report.
High-net-worth individuals are continuing to pour their money into investing in real estate, which is increasing the competition felt by institutional investors.
The report highlighted several themes of private investors in commercial real estate, including that commercial real estate is giving private investors the ability to achieve targeted investment decisions in location, sector, and tenant components. Also, private investors believe they have an advantage over institutional investors since they don’t have to pass decision-making to third parties or be constrained by the need to reach an agreement between numerous other investors.
“These themes, plus individual investor-specific drivers, will continue to attract private investors towards global real estate,” according to the report.
Source: “Private Investors Account for a Quarter of Global Real Estate Transactions,” JDsupra.com (July 24, 2017)
Updated: July 19, 2018