Knight Frank, in its latest ‘Trends in Global Real Estate Investment 2021’ report, noted the global real estate market would observe a period of elevated investment volumes in 2022 as the world moves into the next phase of living with COVID-19, adding that it will provide investors the opportunity to rebalance portfolios.
Europe, Middle East, and Africa (EMEA) is expected to be the region of interest for real estate investment activity, with the office sector likely to account for over half of all cross-border real estate investment volumes.
"Our Capital Gravity model suggests that while the next few years will see a boost in investment volumes, 2022 is likely to see a sharp rise in activity, providing investors the opportunity to rebalance portfolios, execute business plans and further their strategic goals.
"Indeed, we forecast that 2022 will be a record year for global cross-border real estate investment.
"The largest increases in activity are likely to be seen in EMEA and APAC, with EMEA predicted to be the top region of interest next year.
"Overall, the office sector globally is expected to account for just over half of all cross-border investment volumes, indicating that interest in this sector remains very much alive, even as we continue to see a rotation of assets by investors, particularly private equity, into the industrial, residential, life sciences, and data centres sectors."
The past year has demonstrated the relative resilience of real estate as an asset class, albeit with a bifurcation in performance between those well-located, sustainable, core assets and the rest. Knight Frank believes investment managers and institutional investors are expected to lead the demand for office assets, while high-net-worth individuals (HNWIs) will demonstrate strong interest too, particularly in the UK and US office markets, adding that listed or Real Estate Investment Trusts (REITs) and private equity investors are likely to increase their investment into offices.
"…the two investor types are forecast to account for less than 40% of total cross-border investment volumes into the sector. This is likely because REITs are becoming more specialised and private equity investors are investing into sectors which capture structural changes, such as industrial, residential, data centres, and life sciences,"the report noted.
The report concluded by noting that private equity, investment managers, as well as institutions are expected to focus on the industrial sector in Europe, Middle East and Africa, which should lead to a bumper year for inbound investment.
Source: Mohammed Bomanso Issah(Real Estate Times Africa)