The global financial crisis had a number of consequences, one of which has been the expanded role of private investors in driving how the global real estate market operates, a conference has heard.

The role played by private wealth in driving global real estate markets – and not just residential properties – has expanded significantly since the 2008 financial crisis and looks set to remain a driving force, Savills, the property firm, told a recent conference organised by the publisher of this news service.

“Private participation in deals has gone up sharply from about 5 per cent pre-GFC [global financial crisis] to more than 30 per cent post-GFC,” Yolande Barnes, director, world research at Savills, told the WealthBriefing Investment Strategy Summit last month in the City of London.

Barnes delivered the keynote speech at the summit that was also the launch event for a 19-page report, The Weight of Money: How Private Investment Is Changing World Real Estate, produced by this publication in association with Savills. (A copy of the report can be found here.)

“There are clear differences to how HNW individuals invest in property and the approaches of pension/life insurance firms,” Barnes said. For example, the top choice for HNW individuals is residential property; other significant choices are development land and farmland, she said.

“The main thing we get from this report is that the [greater] involvement of private wealth isn’t going to stop…there is a clear appetite for it,” Barnes continued. 

There are differing approaches and trends among certain regions of the world, she said: “We can see a lot of the money that we have seen enter the market over the last five, six years or so has entered the core of prime cities…..yields in the prime core seem to be bottoming out. The search is therefore on for income and also capital growth…that is going to push people to secondary property  and …second-tier cities.”

The report shows that a period of ultra-low interest rates and a desire for a measure of economic safety underscore the importance of brick-and-mortar assets in generating income while other structural global changes drive demand.

One of the most prominent findings of the survey behind the report showed that 91 per cent of wealth managers and private bankers said their clients intend to either maintain or increase their direct real estate holdings; 87 per cent said clients plan to increase or maintain indirect holdings – supporting a general trend seen in the years since the global financial crisis.

The five sections of the report explore the “Rising Tide of Global Capital”; “Successful Wealth Planning”; “Building The Future”; “Growing Fiscal Pressure”, and “Trophy Property’s Allure”. The report also details sources for its findings and gives survey samples. Interviews for the survey were conducted in May.

The summit was sponsored by Dragon Capital, smartKYC, BB Belleveue Asset Management, ETF Securities and Lyxor.