Living Sectors Remain Strong Across the Globe

May 28, 2024

Recently, EVP – Head of Production Ernie Katai and I had the opportunity to travel to London to participate in Knight Frank’s Global Living Sectors Conference in addition to visiting with several global institutional investors.

Knight Frank brought 140 living sector professionals together for a day filled with lively panel discussions, networking, and market updates. With the living sectors becoming a dominant real estate asset class, there’s never been a more important time for us to gather and share actionable insights and to discuss how we can better serve our clients more granularly but on a global scale.  

Traveling to London and meeting with a deep bench of global institutional investors provides us with greater clarity in understanding how investors are viewing and navigating current commercial real estate market conditions around the globe. This insight also shows how together, Knight Frank and Berkadia can help investors to see around corners and address their needs, objectives, and challenges.

The Allure of London

London, the largest city in Western Europe, is a global leader when it comes to finance, education, technology, culture, diversity, and sustainable growth opportunities. As a result, London has consistently been a hotspot for global investment.  

As it relates to commercial real estate, London is a mature market, has a relatively stable economy, and has high barriers to entry, offering investors deep levels of liquidity and attractive long-term risk adjusted returns.  

London regularly witnesses strong demand and rent growth and relatively low levels of supply across all property sectors. This has led to steady long-term appreciation, making investments in London real estate especially attractive.

A Spotlight on the Living Sectors

During our trip, it’s clear the living sectors continue to garner a lot of attention from global institutional investors.

Generally, global investors are steadily interested in increasing their living sectors exposure around the globe. More notably, “niche” asset classes within the living sectors, including co-living, student, and seniors housing, are especially attractive as they search for diversification and yield.

Technology is playing a larger role in shaping the future. Global investors’ strategies are adopting different types of technology products to drive better results and efficiencies while meeting consumer demands.

We are also seeing global investors willing to invest throughout the cap stack. For example, many investors are pivoting strategies from equity to debt. We have seen an abundance of capital being deployed in the form of preferred equity and/or mezzanine financing.

Steering Global Markets to Maximize Investor Success

We continue to gain a comprehensive understanding of investors’ views and perspectives. Focusing efforts on creating, growing, and maintaining relationships with international investors is a priority of ours. Staying aware and informed of what is happening around the globe provides investors with an opportunity to stay ahead of the curve, better navigate the challenges of a cooling domestic market, and position themselves for long-term success.

Berkadia’s alliance with Knight Frank offers Berkadia’s clients unmatched access to domestic and internationally based capital to maximize their investments. The alliance provides clients with greater connectivity to the world’s most active investors, and capital sources.

Dori Nolan, Senior Vice President – Institutional Solutions