World’s wealthy prefer commercial property over bonds, equities investments

Global property consultant Knight Frank’s latest Wealth Report 2020 has revealed that private capital was responsible for $333 billion of all commercial real estate purchases in 2019, a five per cent rise on the previous year.

Responding to the global real estate adviser’s annual Attitudes Survey, ultra-high-net worth-individuals (UHNWIs) confirmed that property remains the most attractive asset class when compared to traditional equities and bonds, due to its relative stability and higher returns.

Of those surveyed, 78 per cent are set to increase or maintain their current allocations to property, ahead of bonds and equities, which saw 68 per cent and 62per cent of respondents seeking to increase or maintain investment, respectively.

Whilst 24 per cent of global UHNWIs plan to invest in commercial property domestically, significant amounts of capital is set to be allocated to cross border purchases in the year ahead. Notably, 32per cent of wealthy investors from the Middle East and 24per cent from Latin America are targeting overseas commercial property opportunities.

The office sector remains the primary target for private capital investors, with healthcare and hotels and leisure following closely in second and third, as the market is seeing investors looking to alternative property types in the hunt for yield, return and diversification. Structural change and uncertainty in other core sectors is prompting investors to reallocate funds. The number of UHNWIs – those with $30 million or more in net assets – rose by six per cent in 2019, taking the total to more than 513,200 reports World Property Journal.

William Mathews, head of capital markets research at Knight Frank said: “In 2019, we saw an increase in the amount of private capital investing in global real estate, rising five per cent from $318.6billion in 2018. “Whilst offices remain a primary target for private capital, the once regarded ‘alternative’ sectors are coming to the fore, with hotels, healthcare, and retirement housing attracting $37bn in the past year alone. This is a trend we expect to see continue as these sectors mature.”