The proportion of private capital investors in New Zealand commercial real estate reached a seven-year high in 2024, according to Bayleys’ data, in line with a new international report showing an increased presence of private investment in the global real estate market.

Bayleys’ global partner Knight Frank’s 2025 edition of The Wealth Report found 25 percent of family offices with existing property portfolios were considering further purchases, with 44 percent looking to expand their exposure to commercial property over the next 18 months.

In New Zealand, Bayleys’ data shows 68 percent of $20 million-plus buyers in 2024 were private investors, up from 47 percent in 2023. Institutional investors made 16 percent of the $20-million plus buyer group, user/other investors 10 percent and syndicators made up six percent.

Bayleys senior director capital markets Jason Seymour says while private investors have made up the majority of buyers in New Zealand’s commercial market for some time that percentage is clearly growing.

“Many institutional investors have been challenged by the economic conditions and have been keeping a more careful eye on their balance sheets and existing portfolios, so have had less head room to look at buying,” Seymour says.

“Many private investors have significant cash reserves they’ve been sitting on for the past couple of years. The market came off that period of record-low interest rates and record-low yields, into an inflationary environment in which activity slowed significantly. That’s when private wealth gets active, looking for the right opportunities as assets are repriced. That’s a big part of why we’ve seen them take up a bigger slice of the market activity,” he says.

The Wealth Report also found that of New Zealand’s family office property investments, 93 percent are domestic; the highest of any country surveyed, with Australia at 90 percent and the US at 86 percent as the next most domestically focused private investor regions.

It's an understandable response as market conditions moved from stable to volatile, Seymour says. “In a changeable environment investors feel safer investing in the local markets they are familiar with. It means they don't have to take on currency risk and the challenges of locally funding offshore investments.

“Investing domestically also taps into simpler legal and tax frameworks, strong and well-established property rights, and easier asset management all within a safe-haven market and relatively stable political system. The reasons that foreign investors are attracted to and invest in New Zealand are the same reasons that private buyers primarily invest domestically,” he says.

The property sectors of particular interest to global private investment, according to The Wealth Report are living (14.3 percent of family offices surveyed), logistics (13.2 percent) and luxury residential (12.1 percent).

Seymour says the global interest in the living sector including student accommodation and build-to-rent, logistics and luxury residential is also reflected in the New Zealand market where the same demand drivers as offshore markets are prevalent.

“New Zealand’s ongoing under-supply of housing combined with strong population growth and related urbanisation supports most living sector assets, including at the luxury end of the spectrum,” he says.

“Meanwhile, in the logistics sector, the boom in e-commerce, supply chain shifts and last-mile delivery demand in urban areas have combined to drive strong demand from occupiers and investors.

“Private capital is attracted to the reliable income streams and comparatively lower vacancy risk in these sectors as well as their capital growth potential. None of these sectors have seen the high level of volatility witnessed in the office and retail sectors. New Zealand investors are not immune to these global patterns.”