The Knight Frank Active Capital Survey 2026: How investors plan to deploy $144bn

Need to know

• The Knight Frank Active Capital Survey reflects the views of 119 global investors
• These investors represent more than $1.4 trillion in AUM
• The survey responses cover $144 billion of planned global deployment
• 87% of respondents by AUM and 69% by number intend to increase direct CRE investment
• 62% expect to be net buyers, signalling strong acquisition appetite, this imbalance also points to potential competitive tension in markets with pricing clarity
• UK and Germany emerge as the top two destinations of interest
• Core capital is back, with $37 billion planned investment targeting this strategy

Thank you to all of the investors who contributed to this survey. Your input is invaluable in shaping a global perspective on capital flows and investment strategies for the year ahead.

Key messages

The Active Capital Survey 2026 finds that global capital is set to focus on strategies anchored in income resilience, sectoral transformation and long-term structural themes. Key findings below:

1. The UK retains its position as the leading global investment destination, with Germany ranking second, reaffirming its status as a core gateway market. France, Spain and the Netherlands complete the top five.

2. Australia and Japan enter the top ten, driven by structural growth themes and anticipated interest rate cuts. Meanwhile, the US ranks tenth, based on number of survey responses targeting the market in 2026.

3. Offices are back in the spotlight. Offices re-emerge as the most targeted sector among respondents. This reflects confidence in workplace recovery, the enduring role of prime as well as pricing adjustments.

4. Retail is resurging. Retail is back on the radar, with over half of respondents planning allocations.

5. Structural change drives demand. Demographic shifts and technological progress are nudging capital towards living ¹ and operational sectors.

6. Industrial / logistics is a high-conviction sector, attracting 63% of investors. This strength is supported by persistent supply chain challenges, steady e-commerce penetration in select markets and the sector’s growing role in national resilience and security-related requirements.

7. Sector and strategy diversification is set to accelerate. Healthcare, data centres, senior living and life sciences are gaining traction via new investors, typically at modest allocations (1<10% of planned capital deployment). 26% planned of investment is set to target Core ($37 billion), 23% Core Plus ($33 billion), 19% Value Add ($27billion) and 28% Opportunistic ($40 billion). ²

8. Partnering is key. 68% of respondents, collectively planning $94bn of investment, state they will consider joint ventures or capital partnering in 2026.

Noise and nuance: navigating selective recovery

The overall survey responses indicate that 2026 will see investor agility becoming of increased importance.

Agility in this context means the ability to respond quickly and effectively to shifting market conditions, identifying gaps left by slower-moving capital, acting decisively where repricing signals are clear and leveraging partnerships to access structural growth themes. Stress-testing planned investment for resilience will be key amid persistent uncertainty.

The survey results indicate that:

• Core strategies are regaining favour as debt costs ease.
• Higher-risk plays in offices, logistics and living sectors are seen as early-cycle opportunities.
• Geographic selectivity and sector rotation will be critical to optimising risk-adjusted returns and capturing early-cycle upside.
• Sector targeting by survey respondents is underpinned by structural growth drivers.
• Investors see Europe offering liquidity, while the findings indicate that target locations in Asia and Australasia provide structural growth and diversification.

Supply-demand imbalance could create sellers markets

Some 87% of respondents by AUM and 69% by number plan to increase direct CRE investment in 2026, yet only 13% expect to be net sellers.

This imbalance suggests that in markets where yields have already moved outwards and liquidity is deep, such as the UK and Germany, where prime values have adjusted and trading activity remains strong, conditions may favour sellers.

Similarly, in France and Spain, where core city pricing is stabilising, relative transparency and depth of capital indicate that sellers could hold a position of strength.

Select Asia-Pacific markets, notably Japan and Singapore, also stand out due to relatively low debt costs and structural demand drivers. For buyers, timing and deal structure are likely to be critical to access repriced opportunities in these geographies.

Europe leads by respondent count; North America leads by capital

The survey is weighted towards European-headquartered investors by number (around 71%), with the UK, Germany, France, Spain and the Netherlands ranking as top destinations.

This points to an intra-regional investment focus. However, when weighted by AUM, it is North American capital, particularly from the US, which is expected to provide scale and accelerate early-cycle opportunities in core European cities and targeted Asia-Pacific markets.

Sector focus: stability with selective growth

Offices are to see a return and join residential and industrial/logistics as anchor sectors for investment in 2026.

Retail is now on the radar for more than half of respondents, signalling selective conviction. At the same time, diversification is accelerating. New investors are set to enter operational sectors including data centres, healthcare, life sciences and infrastructure, alongside living strategies such as student accommodation, single-family rental, co/flex-living and senior living. These sectors are most likely to attract allocations of typically 1<10% of planned investment, apart from 10<20% for multifamily and This highlights investor diversification into thematic growth, driven by demographic shifts, technology adoption and the search for resilient income streams.

Risk spectrum in balance?

Planned capital deployment for 2026 by respondents is split across risk strategies. 26% planned of investment is set to target Core ($37 billion), 23% Core Plus ($33 billion), 19% Value Add ($27billion) and 28% Opportunistic ($40 billion). ³

Core retains the highest average portfolio weighting (51%) among those targeting it, underscoring its role as a stabiliser and key strategy for institutional investors.

Higher-risk strategies are focused on repricing and thematic plays in offices, logistics and living sectors, with unlevered IRR hurdles rates scaling from a mean of 7.4% for Core, 9.1% for Core Plus, 11.7% for Value Add and 15.3% for Opportunistic. Levered required returns scale from a mean of 9.5% for Core, 11.7% for Core Plus, 16.1% for Value Add and 20.1% for Opportunistic. There are sector and regional nuances, explored in From Core to Complexity.

Seven forces to shape decisions

Survey respondents identified seven dominant forces influencing underwriting and deployment decisions:

• Interest rates: The top thematic influencing investment decisions. Set to ease from recent peaks, improving entry points and narrowing bid–ask spreads (54% of respondents)
• Occupier demand: Understanding greater variability in the what and why of occupier requirements (40%)
• Bond yields: Anchoring pricing for Core assets and influencing relative value (31%)
• Demographic changes: Driving structural demand for living sectors and healthcare (31%)
• AI: Accelerating growth in data centres, energy infrastructure and life sciences, influencing offices and other sectors (30%)
• Liquidity & market transparency: Concentrated in transparent markets with pricing clarity (29%)
• Geopolitical risk (International): Shaping cross-border flows and reinforcing selective deployment (20%)

These themes form the strategic backdrop for 2026, influencing sector rotation, risk appetite and timing of capital deployment.

Footnotes

1. Living sectors in this survey include multifamily, student accommodation, single family rental, affordable or social housing, co/flex living and senior living. It does not include care homes or hotels.

2. Does not total 100% as not all investors specified strategy percentages.

3. Does not total 100% as not all investors specified strategy percentages.