Knight Frank has published the 20th edition of The Wealth Report. According to this year’s publication, 2026 may bring a clear recovery in the global commercial real estate market, supported by the return of institutional capital estimated at USD 144 billion.
This shift comes at a time when private capital continues to dominate clearly. Private investors, including ultra-high-net-worth individuals and family offices, have remained the largest buyers of commercial real estate globally for the fourth consecutive year. In 2025, they invested USD 464 billion, compared with USD 347 billion invested by institutional capital.
Knight Frank’s data show that investment decisions are increasingly based on market fundamentals rather than current headlines or short-term sentiment. Despite ongoing geopolitical tensions and regulatory uncertainty, only 15% of survey respondents, representing assets worth USD 1.4 trillion, identify domestic politics as a key factor influencing investment decisions. Just 5% point to regulation and taxes.
The Advantage of Private Capital Is Becoming Increasingly Visible
Speed of execution, flexible financing structures and greater risk tolerance allow private investors to complete transactions earlier in the market cycle and hold assets despite market volatility. As a result, their advantage over more constrained and less flexible institutional investors continues to grow.
Office Market Recovery Driven by Occupier Demand
The office market is adapting to the new reality of work. Knight Frank’s (Y)OUR SPACE survey, covering nearly 300 occupiers and more than 60 million sq m of space worldwide, shows that the hybrid working model is stabilising, while the importance of office-based work is increasing, particularly among companies in the financial and professional services sectors.
Occupier activity confirms this trend across most major markets. Global cities are recording the highest office leasing levels since the pandemic, as companies expand their occupied space, compete for the best locations amid limited supply and optimise their real estate portfolios. In key locations, rents are rising again, and investor interest in the office segment is increasing. The narrative of a permanent crisis in the office market is increasingly at odds with the data.
Retail Market Recovery Highlights Undervalued Sectors
The retail real estate segment is regaining investment appeal thanks to the limited supply of new projects. In Australia, the sector achieved a total return of 9.2% in 2025, its best result since 2017, supported by years of limited development activity and rising tenant turnover.
However, the repricing trend is broader than any single market. Where the supply of new projects has been limited, the stability of rental income is improving and investor sentiment is clearly strengthening. Increasing opportunities are emerging in sectors from which capital withdrew too quickly, despite the persistence of solid fundamentals.
Large Transactions in Europe Signal the Return of Investor Confidence
Europe is seeing the return of large-scale transactions, primarily in the office sector. Private investors allocated USD 18.9 billion to European offices over the past year, and the sector is now one of the most sought-after investment segments globally for 2026.
Institutional capital is expected to follow this direction, focusing on the best ESG-compliant assets in central business districts, as well as selectively on secondary properties where valuation corrections have created attractive investment opportunities.
Krzysztof Cipiur, Director, Capital Markets at Knight Frank, added:
“In Poland, we are observing a dynamic increase in activity from both domestic and foreign private investors in the commercial real estate market. Private capital has moved much faster than institutional investors to take advantage of investment opportunities resulting from strong economic growth and attractive asset valuations in Poland.
Poland is now among the fastest-wealth-growing countries in the world, and the pace of growth in the number of billionaires is one of the highest globally. We forecast that over the next five years their number will increase by as much as 123%.
The growing wealth of domestic capital is already being reflected in the real estate market. The share of Polish investors in total transaction volume in 2025 was more than five times higher than the long-term average and reached 18%. We expect the share of private, local capital to continue growing in the coming years.”
Capital Flows Rebound in Asia-Pacific
In the Asia-Pacific region, cross-border investments by wealthy individuals reached their highest level since 2019, with capital from mainland China accounting for 46% of purchase interest. Investment activity is being driven by valuation corrections and a change in investor approach.
Younger investors are moving away from passive purchases of trophy assets towards more active strategies focused on increasing property value in the office, retail and hotel sectors. At the same time, capital from Singapore is increasingly returning to the domestic market in response to currency volatility, leading both to a recovery in cross-border demand and to greater liquidity in key markets such as Singapore and Hong Kong.
India Offers a More Stable Entry Point for Global Capital
India’s commercial real estate market has been significantly transformed by the growing share of domestic capital. After the slowdown in foreign investment following the pandemic, the share of domestic investors increased from 11% of total private equity investment to almost 26% in 2025.
With GDP growth above 7%, falling inflation and strong occupier demand, the market remains resilient. Leasing of both office and logistics space is reaching record levels, while the retail sector is gradually recovering. Thanks to the stronger position of domestic capital, India now offers more stable and lower-risk opportunities for global investors returning to the market.
Market Fundamentals Matter More Than Short-Term Sentiment
The report indicates that 2026 will favour investors focused on valuations, asset income and limited supply rather than short-term volatility or current market sentiment. Markets such as the United Kingdom continue to attract strong investor interest despite negative sentiment, showing the growing divergence between market perception and actual capital allocation.
Nick Braybrook, Global Head of Capital Markets at Knight Frank, commented:
“The global commercial real estate market has clearly entered a new phase of the cycle, in which valuation corrections, supply and demand fundamentals, stabilising interest rates and greater predictability of income are once again attracting capital to the market. Recent global events have undoubtedly increased uncertainty, but the direction of the market continues to be driven by fundamentals and remains unchanged.
Institutional investors are returning to the real estate market, but private capital continues to set the pace thanks to its flexibility and speed of execution. Over the past decade, the sophistication of private investors has also increased significantly. Commercial real estate is now seen as a key element of a diversified investment portfolio, offering stable income, potential for capital growth and relative security. In this new market phase, those investors who are able to act quickly and decisively will be best positioned.”
