Zara founder Amancio Ortega and other super-rich individuals, along with their investment firms, are strengthening their control over the trillion-dollar commercial real estate market, while institutional investors lag behind, Bloomberg reports.
Cool Assets
According to the publication, the leader in this area is 90-year-old Zara owner Amancio Ortega, whose net worth is $131 billion. The richest man in Spain expanded his global commercial real estate portfolio last year by acquiring at least ten properties in North America and Europe for over $1.5 billion.
Other wealthy individuals are also maintaining their interest in this asset class: last year they invested a record $464 billion in the purchase of offices, logistics centers, and residential complexes.
As Bloomberg reports, institutional investors in this sector are lagging behind private equity representatives: during the same period, they invested $347 billion in real estate. The publication cites a statement from Nick Braybrook, a representative of the British company Knight Frank, that institutional buyers are returning to the real estate sector, but private equity "is still setting the pace."
Profitable Deals
According to Knight Frank, in 2022, private equity investors became the most active buyers of commercial real estate for the first time, while institutional investors shied away from operations in this sector amid rising borrowing costs. As Bloomberg writes, this allowed the super-rich to acquire assets at favorable prices.
As an example, the publication cites the actions of Oracle co-founder Larry Ellison, who purchased an office building in the prestigious London district of St. James for £162 million ($219 million) at a price below the initial asking price, and restaurant magnate Greg Flynn, who bought two towers in San Francisco under similarly favorable conditions after vacancies arose there due to the pandemic.
Money Goes to Data Centers
According to Knight Frank, as reported by Bloomberg, by 2025, the total volume of investments in commercial real estate increased by 12% compared to the previous calendar year, with the largest amounts invested in industrial, office properties, and rental housing.
At the same time, the boom in artificial intelligence has led to an annual increase in investments in data centers (DCs) by 36%, contributing to the emergence of a new class of billionaires in the real estate sector.
