Private investors are dominating commercial property deals over US$1bn (£720m). They were responsible for 43% of mega deals in 2017, compared to institutions which accounted for 31%, according to Knight Frank’s global wealth report 2018.
Which nationalities are dominating the market? And where will future demand come from?
Here, we present five key findings from the global wealth report.
1. The UK was the only country in Europe to see its “ultra-wealthy” population shrink.
Across Europe, there was a 10% rise in the number of people with $50m or more in net assets last year, taking the total “ultra-wealthy” population to 35,180.
However, the UK failed to keep pace with the rest of Europe, with the number of qualifying people falling 2% to 4,580 year-on-year.
2. But London is top for diversity of international investment demand.
While New York leads in terms of the largest annual average private investment into property over the two-year period to the end of 2017, London takes top slot for diversity of demand, measured by the number of different nationalities making investments.
European centres compete closely with North American hubs on this measure, with Hong Kong leading the pack in Asia.
3. North America remains the world’s largest wealth region….
Some 34% of the world’s ultra-wealthy are based in North America, making it the world’s largest wealth region. Their ranks rose by a further 5% last year, taking the total to 44,000.
New York is a dominant centre for high net worth individuals (based on households earning more than $250,000 annually), with almost double the population of Los Angeles in second place.
The top nine places on this measure all go to North American cities, with London filling the tenth spot.
Over the next five years this is expected to change, with Jakarta and Cairo seeing the biggest increase in this bracket, followed by New York, Los Angeles and Delhi.
4. …However, Asia is catching up.
Europe failed to fend off a strong Asian challenge, narrowly losing its second place spot in the Knight Frank wealth ranking.
In China, the ultra-wealthy population will more than double in the next five years, according to Wealth-X Institute.
There will also be strong growth in Japan (+51%), India (+71%), Indonesia (+66%) and Malaysia (+65%). Asia has emerged as the predominant source of demand, accounting for just under two thirds of purchases of $1bn or more by volume.
5. Office buildings are at the top of the shopping list.
Above the billion-dollar threshold, most 2017 transactions of $1bn of more involved office buildings.
Broadening the criteria to include deals worth more than $500m, the same trend of rising investment is evident, with purchases growing from $21bn in 2012 to $53bn in 2017.
Some 81% of last year’s deals above this level were for offices.
Main image credit: Stefan Klein/imageBROKER/REX/Shutterstock
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