Insider knowledge

James Farrell
Head of Rural Consultancy

The opportunity to do well by doing good has never been clearer.

News coverage of climate change, habitat degradation and violent weather events provides an almost daily reminder of how the world is changing around us. Roughly 55% of global GDP, an estimated US$58 trillion, is moderately or highly dependent on nature, according to a 2023 study by PwC and the World Economic Forum.

With that in mind, the best investment anyone can make in 2024 is in nature, the ecosystem and the economic prosperity that it underpins.

Ed Mansel Lewis
Head of Viticulture

The value of bare land suitable for vines in the south east of England has risen from £11,000 per acre to £20,000 per acre in eight years. This is still some way off prices in Champagne, where land often trades for more than €400,000 per acre. Perhaps this is why French wine producers including Taittinger and Pommery have bought land in the UK – in the expectation
that land values will continue to climb. I would agree with them.

Kate Everett-Allen
Head of International and Country Research

Acquiring private rented stock in markets introducing new energy efficiency rules for landlords such as Paris and Amsterdam would be my pick for 2024. Tenant demand continues to outweigh supply in most developed markets due to affordability constraints and demographics.

Some landlords with multiple properties will relinquish their assets due to the cost of retrofitting multiple homes to meet the new energy efficiency rules. Properties that aren’t upgraded will face a rental ban although in most cases the rules do not apply to furnished holiday lets. Similar policies could start to emerge across Asia-Pacific and perhaps the US, depending how high up the political agenda ESG matters sit in the next administration.

Anna Ward
Associate, Residential Research

I’d invest into building new London lab space. The capital’s property market is struggling to provide biotech and life sciences entrepreneurs with the research space they need. Knight Frank data shows that demand for lab space in the capital stands at 974,500 sq ft, while availability is just 179,295 sq ft – less than a quarter of current requirements.

The surge in demand comes after life sciences firms in London secured £1.8 billion of venture capital investment last year. That helped spur a 60% rise in new company incorporations year-on-year.

William Matthews
Head of Commercial Research

It might seem a strange time to advocate for offices, but well-trodden arguments over occupancy and corporate demand are, at the very least, nuanced by geography and a host of local factors.

In a recent survey for our (Y)our Space research report, 56% of global corporates felt a hybrid workstyle was the future with only a tiny share taking a “remote first” approach. Meanwhile, rents for the best buildings are rising, partly because build cost inflation has severely curtailed new supply, and the somewhat indiscriminate move away from offices has left yields looking attractive on an historic basis. The sector is now a fertile hunting ground for mispriced assets – none more so than those comparatively rare poor-quality buildings in good locations, which can be efficiently redeveloped to modern standards.

Christine Li
Head of Research, Asia-Pacific

In the next decade, trillions of dollars are expected to shift to the next generation in Asia, reshaping the investment and wealth management landscape. Around 70,000 HNWIs from Asia are poised to pass on approximately US$2.5 trillion in the next 10 years, surpassing the combined GDPs of South Korea and Taiwan, according to Euromoney People Intelligence.

This shift is already transforming the investing landscape, fuelled by a growing emphasis on sustainable investing and ESG considerations. Traditional investments like art, wine or jewellery may give way to a preference for those with a more positive impact on society, such as contributing to food security, mitigating climate risk and healthcare.

Flora Harley
Head of ESG Research

Refurbishing office stock in central global cities like London, Paris, New York and Singapore is my pick for 2024. There is increasing demand for net zero-enabled buildings that support occupier wellbeing, yet supply doesn’t match up. Half of the world's 2,000 biggest listed companies have set a target to get to net zero emissions by 2050. There is also a huge need to repurpose offices across smaller towns and cities. This presents a fantastic opportunity to alleviate some of the worst aspects of the housing crisis, albeit to a limited degree.

Will Mckintosh
Regional Head of Residential, MENA

Dubai is a good bet. The population is growing rapidly and there is a very limited supply of land and new projects. Combine that with the fact that the city is now regarded as a truly global destination, and I think investors have a raft of opportunities for 2024 and beyond. While we will see normal market cycles, the “boom and bust” that we have seen previously presents less of a risk. Residential would be my pick, but there is also a lack of supply in office space and investment grade assets – hotel occupancy also remains very buoyant, for example.

Andrew Shirley
Head of Rural Research

Echoing James Farrell, I would be looking very carefully at farmland or forestry opportunities that can offer ultra-high-integrity and reputably certified nature-based solutions that are able to withstand the scrutiny of even the most forensic “greenwashing” tests. Ideally, they would also provide a commercial income in addition to any carbon or biodiversity credits.

Simon Gammon
Managing Partner, Knight Frank Finance

Inflation has turned a corner and debt costs will fall as the year progresses. We will reach a point at which debt becomes a viable part of any investment strategy once again.From equities to art, the outlook for asset values is brighter. We expect investors to grow increasingly confident that they can secure returns that beat the cost of any mortgage debt they take on. For 2024, I would seek to utilise finance to free up liquid capital, positioning myself to capitalise on new opportunities the moment they emerge.

Ben Burston
Chief Economist, Australia

Investors are seeking greater diversification and the living sectors are at the front of the queue. While institutional investors are predominantly focused on large-scale investment in build-to-rent, private investors have an opportunity to gain exposure to living sectors through the development of co-living assets. That should allow them to tap into surging underlying demand for rental accommodation while specifically targeting the 25–34 age bracket. Vacancy rates are close to 1% nationally and younger renters in the major cities are seeking new options besides the more established student housing and build-to-rent markets, which target younger and older age groups respectively.

Stephen Springham
Partner, Head of UK Markets

Supermarkets are my pick for 2024, but only those that meet certain criteria spanning turnover, sales density, local population density and the level of competition from other operators.
The right supermarket investments will deliver stable, low-risk, long- term income comfortably above all commercial real estate averages. Annual total returns are greater than 7% and annual income returns are north of 5%. Supermarkets are in vogue with investors, but there is considerable merit in straying from the herd and going against the grain of common investment criteria.

Judith Fischer
Associate, European Research

Despite various headwinds, Europe is predicted to remain the largest destination for global cross-border capital in 2024, with industrial and residential expected to be the most invested sectors. There will likely be some significant pockets of resilience. In Spain, for example, we expect the hotel sector to see inbound investment, supported by above-average economic growth. In the office sector, pricing opportunities across Europe from shifting yields are increasing. Prime office yields in cities such as Munich, Dublin, Berlin and Frankfurt have expanded by more than 100 basis points from their recent lows.

Hugh Dixon
Partner, Head of Private Office New York

I would recommend spreading the investment across different property types and geographic locations to minimise risk. Explore emerging markets with potential for growth and development, while ensuring you have a foothold in stable and established markets with a history of steady appreciation.

We are seeing real value in commercial markets across multiple locations, specifically New York and London. Residential properties, including apartments or single-family homes, can provide a steady income stream through rent. Our UHNWI clients are seeking unique assets in this space which are hard to replicate.

I would favour areas with a growing technology sector, which often experience increased demand for real estate. This is the case in Miami, with Amazon and other big tech companies looking at Florida. Additionally, the Middle East is driving tech-related investment associated with large projects such as NEOM in Saudi Arabia.

Erin van Tuil
Partner, Head of Residential, Australia

The success of Crown Residences at One Barangaroo, Australia’s first fully integrated hospitality branded residences, made it clear that service provision is still an aspect of apartment living that is yet to be fully harnessed by Australian developers. I see a strong opportunity for forward-thinking developers and luxury hoteliers to expand into this sector to deliver more hospitality- branded residences.

Crown Residences at One Barangaroo is the only truly super-prime building in Sydney, if not Australia. When you consider that alongside the considerable growth in Australian UHNWIs we’re likely to see over the coming years, super-prime developments that offer exceptional design, location and service, albeit perhaps not linked to a hotel brand, would also be a sector I expect will perform strongly.

Victoria Ormond
Partner, Capital Markets Research

Thinner competition is creating opportunities for investors across the risk spectrum, especially for those not reliant on debt. This ranges from opportunities in sectors with structural tailwinds, including “beds, sheds, eds and meds”. Other opportunities are likely to arise from some sectors being over-sold, including – selectively for the right building in the right location – offices. This creates opportunity for contrarian investors. There are likely to be liquid, trophy assets coming to the market, as some investors look to raise capital. At the other end of the spectrum, selective secondary and tertiary assets with good bones and the right location, but undergoing significant repricing, will create opportunities for repurposing and refurbishment.

David Goatman
Global Head of Energy and Sustainability

As we move towards greater electrification in all areas of our lives, property projects and land with substantial grid connectivity, both import and export, will become increasingly valuable. I would seek to develop light industrial and logistics with co-located renewables and a super-charging hub for fleet and trucks. Demand for this co-located approach will grow substantially over the next few years.

Josephine Jones
Partner, Knight Frank Capital Advisory

Interest rates are predicted to fall swiftly and the forward curve pricing three- and five-year debt is now more than 100 basis points lower than only a few months ago. However, with inflation still sticky and projected CAGRs topping 4% over the same period, there is once more a narrow window of negative real rates.

This will provide a compelling opportunity for those nimble enough to find assets that directly benefit from inflation-linked rental growth. As forced sellers continue to provide mis-priced opportunities, it’s a market that requires high conviction underwriting – those who can access these opportunities with attractive supply/demand fundamentals and apply requisite ESG future-proofing will generate outperformance.

Alasdair Pritchard
Partner, Private Office

We’re seeing increasing numbers of people opt for another base in European gateway cities. A lack of suitable product has weighed on activity in several markets, but developers have responded and choice is now improving.

For anybody looking to put money into an apartment to rent out, or visit with family, that is likely to benefit from strong growth in capital values, I would invest in Italy. The tax regime allowing non-domiciled Italian residents to pay an annual flat tax of €100,000 on foreign income has been hugely popular. Milan gives you the international airport. Lake Como gives you the lifestyle with the connectivity. Florence is a year-round city, both from a business and cultural perspective. Venice, too, gives you waterfront living, and it’s a quick nip into Cortina for some fresh mountain air.

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