Economy Watch: Ultra-High-Net-Worth Individuals Keen for CRE

Knight Frank's annual Wealth Report revealed the ultra wealthy accounted for a quarter of all global commercial property transactions in 2016.
Courtesy of Knight Frank's
Courtesy of Knight Frank’s “Wealth Report 2016”

Knight Frank’s “Wealth Report 2016,” which it publishes annually, found that in 2015, ultra-high-net-worth individuals (UHNW) accounted for 25 percent of all global commercial property transactions. The UHNW population—which the company defines as people with at least $30 million in net assets—invested $178 billion in commercial properties, with a total of $902 billion since 2009.

The highest concentration of private investment by UHNW individuals last year was in North America, with 32.3 percent of CRE investments coming from private investors, the report said. Much of that investment was from Chinese and Middle Eastern UHNW individuals, presumably looking for returns in a place of relative political stability.

UHNW individuals also have a fondness for the United Kingdom. The investment total among that class of people in 2015 included $58 billion in Europe, with $16 billion of that amount spent on property in the U.K. The amount of investment properties in the U.K. in 2015 was three times higher than experienced in France and a third more than in Germany.

The report also noted that over the next 10 years, the global population of UHNW individuals is projected to rise by more than 40 percent to 263,500, from the current total of 187,500. By 2025, Asia will overtake Europe as the second-largest concentration of wealthy individuals (North America will remain first). Though it isn’t necessarily an iron-clad extrapolation, because a lot can happen in 10 years—such as the 2016 U.S. election being more disruptive than now imagined—it seems to point to a continued, and probably increasing, influx of capital for CRE investment from Asia to North America.