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Knight Frank, in its latest global wealth assessment released recently, reported a turning point in commercial real estate (CRE) markets, with USD 144 billion of institutional capital expected to re-enter in 2026. Private investors, including high net worth individuals and family offices, continued to dominate transactions for the fourth consecutive year, deploying USD 464 billion in 2025 compared to USD 347 billion by institutions. The report highlighted that capital allocation is being driven primarily by pricing, income visibility and supply fundamentals rather than geopolitical or regulatory concerns. It further noted recovery trends across office and retail segments, resurgence in European deal activity, evolving investment strategies in Asia-Pacific, and increasing domestic capital participation in India, which has improved market resilience and attractiveness for global investors.
Knight Frank reported earlier this week that global commercial real estate (CRE) markets are approaching a new investment cycle phase, with USD 144 billion of institutional capital expected to re-enter in 2026, even as private wealth continues to dominate transaction activity. The findings were published in the consultancy’s 20th edition of The Wealth Report, covering global capital flows, investor behaviour and sectoral performance. Advertisement
The report noted that private investors, including high net worth individuals and family offices, remained the largest buyers of global CRE assets for the fourth consecutive year. In 2025, private capital deployed USD 464 billion compared to USD 347 billion from institutional investors, reinforcing its position as the primary driver of market activity.
Knight Frank indicated that investment decisions are increasingly being guided by market fundamentals rather than geopolitical or policy-related developments. Survey data covering USD 1.4 trillion in assets under management showed that only a small proportion of respondents considered domestic politics, regulation or taxation as key investment drivers, suggesting a shift towards pricing, income stability and supply dynamics.
The report highlighted that private capital continues to benefit from faster execution timelines, flexible structuring and a higher tolerance for risk, enabling it to transact earlier in the investment cycle and maintain positions during periods of volatility. This has widened the gap between private and institutional participation, particularly in uncertain market conditions.
In the office segment, the report pointed to a stabilisation of hybrid working patterns alongside a gradual return to office-first models, particularly among financial and professional services firms. Leasing activity across major global cities has increased, with occupiers expanding footprints and competing for prime assets in supply-constrained locations. Rental growth has begun to return in core markets, aligning investor interest with occupier demand.
Retail real estate also showed signs of recovery, supported by limited new supply and improving tenant performance. The report cited Australia as an example, where retail delivered total returns of 9.2% in 2025, marking its strongest performance in several years. It added that similar trends are emerging in other constrained markets where earlier capital withdrawal had led to mispricing.
Europe witnessed a revival in large-scale transactions, particularly in the office sector, with private investors deploying USD 18.9 billion over the past year. The report stated that institutional capital is expected to follow, focusing on prime, ESG-compliant assets in central business districts, along with selectively repositioned secondary assets.
In Asia-Pacific, cross-border investment by high net worth individuals reached its highest level since 2019, driven largely by mainland Chinese capital. The report observed a shift among younger investors towards value-add strategies across asset classes, while Singapore-based capital is increasingly reallocating towards domestic markets amid currency volatility.
India’s CRE market was identified as comparatively resilient, supported by strong economic growth, easing inflation and robust occupier demand. Domestic capital participation increased significantly, rising from 11% of private equity investment to nearly 26% in 2025, contributing to market stability. Office and logistics leasing reached record levels, while retail showed recovery trends, positioning India as a relatively de-risked entry point for global capital.
Knight Frank indicated that capital flows in 2026 are likely to align more closely with income visibility, pricing corrections and supply conditions, rather than short-term sentiment, with both private and institutional investors recalibrating strategies accordingly.
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