Global real estate markets are navigating a period of significant transition, shaped by shifting economic policies, geopolitical uncertainty and evolving investor sentiment.
The Finding Margin report from Knight Frank Finance Private Office provides a comprehensive overview of the challenges and opportunities within prime property markets, with a particular focus on how high-net-worth individuals (HNWIs) are adjusting their borrowing strategies in response to economic shifts. While long-term fundamentals remain solid, the elevated cost of debt, fluctuating tax policies and regulatory changes have led to a recalibration of investment decisions.
In Prime Central London (PCL), average values have declined by 18% since their peak in 2015, but demand is expected to recover as economic stability improves and investors seek to capitalise on relative value. Falling interest rates and a more predictable political environment are likely to drive renewed interest from both domestic and international buyers. The market has also seen increased participation from cash buyers, who are already utilising current conditions to secure assets at attractive valuations.
Beyond the UK, global wealth migration trends are reshaping prime real estate demand. Italy is emerging as a key destination for UHNWIs, thanks to its favourable tax regime, cultural appeal and steady price growth. By 2028, Italy is projected to have the fourth-largest wealth population in Europe, reinforcing its status as a sought-after market. Similarly, jurisdictions such as Monaco and Switzerland continue to attract HNWIs prioritising financial stability, security and high quality lifestyle amenities.
Investor sentiment towards super-prime markets is mixed, with some cities experiencing price stagnation while others show resilience. London’s super-prime segment has remained relatively stable, supported by limited supply and strong underlying demand for best-in-class properties. However, global factors, including rising compliance scrutiny and taxation shifts, are influencing high value transactions. The UK’s recent overhaul of its non-dom tax regime has prompted some HNWIs to reassess their residency and structuring strategies.
Against this backdrop, commercial real estate markets are undergoing structural shifts, particularly in sectors such as logistics, retail and hospitality. While some segments continue to face headwinds, investor appetite for high quality assets in strategic locations remains strong. The ongoing integration of AI and data infrastructure is also shaping the demand for specialised property assets, particularly in technology-driven markets.
As 2025 unfolds, strategic financial planning is becoming ever more important. Investors are seeking opportunities that balance long-term capital growth with short-term resilience. The role of professional advisory services is increasingly critical, helping clients navigate complex regulatory landscapes, optimise debt structures and identify emerging market trends. With interest rates expected to moderate and global wealth trends continuing to evolve, prime real estate remains a key component of diversified investment portfolios.