Private Investors Step Up Their Game in Real Estate Plays
Even as the widespread COVID-19 lockdowns and travel restrictions around the world have stalled many investors’ short-term capital deployment plans, private investors have been particularly active throughout the year, JLL reports. Many have entered the commercial real estate market for the first time.
“We’re seeing high net worth investors emerging on the bidder lists of active transactions, showing their increased appetite for real estate, and, in some cases, real estate assets of scale,” says Sean Coghlan, global director, capital markets research & strategy at JLL. “This includes new groups coming to market, attracted by record-low financing rates and lessened competition from bigger players.”
More than 10,000 single-family offices globally hold assets in excess of US$5 trillion across all investment vehicles, according to JLL. Investment by private capital has tripled since 2010. After investments in finance or industrial conglomerates, real estate ranks third as an asset class for private capital, according to Wealth-X’s Billionaire Census 2020 report.
JLL says geopolitical volatility domestically – particularly in the Middle East and Hong Kong – is prompting family offices to look for opportunities in safe-haven markets, says Fraser Bowen, head of capital for EMEA at JLL. Political stresses have caused more money to flow offshore from Hong Kong recently, with London being the main focus.
“As institutional investors have taken a step back this year to assess risk, private capital —which was already expanding in its influence before COVID-19 — has emerged as an increasingly important source of liquidity,” Bowen says. “COVID-19 has prompted these investors to look at assets that they may not have previously been able to secure due to the larger volumes and the competitiveness of capital.”
And as more private capital competes with institutional investment, the complexity of deals is increasing.
“We’re already seeing how much more professional and strategic family offices now are,” says Alice Buckingham, director in JLL’s international capital coverage team. “While some are still motivated by emotional factors such as the desire to hold a piece of real estate in a certain preferred city, there’s a lot more strategic thinking occurring now with appointed or sometimes even in-house expertise helping make that investment decision.”
For comments, questions or concerns, please contact Paul Bubny
- ◦Financing
- ◦Sale/Acquisition
Connect CRE News
Your source for daily news covering CRE transactions and trends. Stay informed on national, regional and property sector news that matters to your business.
Connect Events
Whether digital or in-person, Connect Events set the stage to bring together relevant content with CRE’s most active players to engage, influence and inform.
Connect CREative
A full-service marketing agency dedicated to CRE clients. Combining our CRE background with our team’s business, marketing, communications, technology, to develop and execute comprehensive strategies to create, build, and and grow successful brands.