Dubai, UAE – According to Knight Frank’s forthcoming edition of The Wealth Report 2021, private capital has been undeterred by the Covid-19 pandemic and has continued to invest in commercial real estate around the world.

The volume of private capital invested globally was circa US$232 billion - 9% above the ten-year average, albeit down on 2019 levels.

Looking forward, the Knight Frank Attitudes Survey highlights that a quarter of ultra-high-net-worth individuals (UHNWIs) plan to invest in commercial real estate assets in 2021. In the Middle East, this number sits slightly lower at 23%. Looking ahead, for Middle Eastern UHWNIs the logistics, residential private rented, healthcare and data centres sectors are set to garner greater levels of interests. 

Which of these sectors are becoming of more interest?

% respondents (respondents chose up to three sectors)

 

Middle East

Global
Average

Offices

13%

18%

Data centres

23%

11%

Hotels and leisure

13%

13%

Retail

4%

11%

Logistics

33%

28%

Industrial

19%

17%

Infrastructure

8%

11%

Education

8%

6%

Student housing

6%

9%

Retirement

15%

14%

Healthcare

25%

17%

Agricultural

15%

12%

Residential private rented sector (PRS)

33%

32%

Development land

23%

24%


Victoria Ormond, Capital Markets Research Partner at Knight Frank
said: “There are a number of drivers set to shape markets throughout 2021 – the move to safe havens – large, relatively liquid, transparent markets should continue to attract global investment; global travel disruptions also provide opportunity for private investors to leverage understanding and ties to more local markets, which under usual circumstances might face larger competition for assets by institutional investors; ESG – something private investors cannot afford to ignore and the rise of data centres – where there is huge potential for investment opportunities.”

The Wealth Report 2021 also reveals the amount of private capital invested into real estate in 2020 split by sector: 

Sector

2020* US$bn

2019* US$bn (for comparison)

Apartments

88.9

124.3

Offices

59.2

89.6

Industrial & Logistics

34.0

48.7

Retail

27.7

43.5

Hotels

13.0

29.5

Senior Housing & Care

7.1

8.8

Residential condominiums

1.9

2.6

Source: RCA *Data provisional

 


Alex James, Partner, Head of Private Client Advisory, Commercial, said:
"Commercial real estate provides investors with a relatively high yielding stable income return, the potential for capital value growth and diversification. These are all key drivers in preserving wealth for future generations and protecting against the impact of the global pandemic. 

“While the pandemic has impacted the way we live, work and do business, there is renewed optimism in 2021 that as travel restrictions reduce and the rollout of the vaccination programs reaches advanced stages, private capital will look to increase its exposure in familiar markets and focus on sectors with strong long-term fundamentals.” 

The US (US$141.7bn), Germany (US$11.1bn) and the UK (US$10.6bn) are the top three countries for private capital real estate investments in 2020* with the majority of countries in the top 10 relying on domestic investment over cross-border investment. 

Country

2020* US$bn

Domestic investors

Cross-border investors

US

141.7

97%

3%

Germany

11.1

67%

33%

UK

10.6

47%

53%

Sweden

8.3

100%

 -

France

7.5

95%

5%

South Korea

6.0

100%

 -

Japan

5.5

92%

8%

Canada

5.4

99%

1%

Netherlands

5.4

83%

17%

China

3.7

99%

1%

Source: RCA *Data provisional

  


Knight Frank’s Attitudes Survey shows that the average asset allocation in UHNWIs real estate investment portfolio is as follows:

 

Middle East

Global average

Offices

24%

20%

Hotels and leisure

12%

8%

Retail

8%

9%

Logistics

5%

5%

Industrial

7%

6%

Infrastructure

0%

2%

Education

3%

2%

Student housing

3%

2%

Retirement

2%

4%

Healthcare

3%

2%

Agricultural

1%

3%

Residential private rented sector (PRS)

18%

23%

Development land

11%

8%

Other (please provide details)

3%

3%


For all media & PR enquiries, please contact:

Thomas Farmer | E: Thomas.Farmer@me.knightfrank.com 

Knight Frank has grown to become the world’s largest privately owned global property agency and consultancy company and has a strong presence in the Middle East with offices in Dubai, Abu Dhabi, and Saudi Arabia.

Together with its New York-based affiliate Newmark, Knight Frank has an impressive global footprint network across 57 territories, 488 offices and over 20,000 property professionals and as the world’s leading international property consultant, they continue to build on their long-term global presence across the residential and commercial property and service sectors.

For further information about Knight Frank, please visit www.knightfrank.com or www.knightfrank.ae 

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