In the light of the pandemic, property has turned out to be one of the most reliable assets. As a result, cross-border real estate investment is expected to reach record volumes next year as all types of investors make property the central axis of their portfolios. The US and EMEA are the two regions forecast to receive most interest, with offices and residential and hotel real estate among the favourite picks.
Cross-border real estate investment in 2022
A recent report from Knight Frank on cross-border capital flows for next year highlighted the fact that 2022 will see record volumes of investment. The surge of funds will come from all investor sectors and across asset types.
The report expects the US to be the world’s number one destination for cross-border real estate investment next year. However, EMEA (Europe, the Middle East and Asia) will rank close behind with the UK, Germany and the Netherlands particular focal points of interest. In Asia, Japan is forecast to attract a significant proportion of funds.
Residential real estate a top favourite
Residential property will continue as a major preference for investors worldwide and the most sought-after country will be the US. For example, cross-border investment from Canada into the US for residential real estate is expected to total US$4.5 billion next year.
However, Europe will also feature on investors’ radars as real estate proves to be one of the most resilient asset types in the pandemic.
Offices move centre stage
Despite the surge in working from home, the world’s workforce is gradually returning to the office. As a result, cross-border real estate investment will focus on office properties next year to the extent Knight Frank estimates that they will constitute around half of the total.
Offices in the UK will be of particular interest to investors from the US and high-net-worth individuals will centre their investment on offices in both the US and UK. The report predicts that the sector will also receive major interest from investment managers and institutional investors.
Hotels also set for record year
The study includes hotels as one of the main picks for cross-border investment next year and believes this sector will record the highest volumes ever. Private equity investors reportedly have their eyes on hotels and will account for around half the total volume.
Green investment top priority
In line with the surge in ESG (Environment, Sustainability and Governance) in construction and development, sustainability has also become a major consideration for cross-border real estate investment. According to Knight Frank, the greening of assets is starting to have strong impact on performance and green-rated buildings attract a sales premium of between 8 and 18%.
The report states that increasingly portfolios are “balancing the imperatives of sustainability with ambitions of growth”. It lists the world’s greenest cities for real estate investment as London, Shanghai, New York, Paris and Washington DC.
(Source: Knight Frank)