Paper vs property: Why the high net-worth are abandoning real estate

Knight Frank CEO Mark Dunford giving his presentation during a media briefing on Wealth and Investment Trends in Kenya on July 14,2026. [Benard Orwongo Standard]

The debut of private capital pooling investments such as the National Infrastructure Fund (NIF) and the Sovereign Wealth Fund (SWF) have made the super-rich shy away from real estate, a new report shows.

Kenya’s dollar millionaires’ investments are now tilted towards such securities and other similar debt instruments as they target liquidity and higher returns.

These debt instruments are the new safe haven for investors seeking stability in a market that since Covid pandemic has experienced numerous volatilities.

 

Further, an overcrowded real estate sector, particularly for grade B office spaces, has made them relook at their portfolios in the space.

The Wealth & Investment Trends Report 2026 by Knight Frank, a real estate consultancy, shows while the high-net-worth individuals (HNWIs) are slowing down on acquisition of new homes, their focus has turned to alternative asset classes.

These include Real Estate Investment Trusts (REITs), fixed income products, data centres, farmland, industrial and logistics.

The report states that the dollar millionaires are in search of asset classes that provide stronger returns, flexible portfolio and liquidity.

As such, the amount allocated to purchase of secondary homes has reduced with the report showing this trend will continue into 2026.

The report, which collated views from wealth managers of the dollar millionaires, notes that largest proportion of respondents (26 per cent) indicated that less than 10 per cent of their clients’ wealth is currently allocated to primary and secondary homes.

It says this is a moderation from previous years, reinforcing the gradual repositioning of portfolios away from traditionally dominant residential property investments.

“This trend underscores changing investment behaviour among HNWIs, driven by evolving economic conditions, the search for stronger returns, and the need for greater portfolio flexibility and liquidity,” reads the report.

It adds: “Investors are increasingly prioritising assets that generate stable income streams, preserve capital, and offer easier market exit opportunities.”

The report lists REITs, financial instruments and high growth sectors as the areas of diversification.

It says REITs offer more accessible, professionally managed, and liquid exposure to the real estate sector without the operational burden of direct property ownership.

Financial instruments such as bonds, fixed income securities and money market funds, are said to continue attracting investors  who are seeking stability amid economic volatility.

For high growth sectors, technology, agriculture, renewable energy, and innovation-driven enterprises are providing HNWIs with a growing appetite for scalable, future-oriented investment opportunities.

Knight Frank says the overall decline in wealth allocation towards residential property over recent years suggests a broader strategic shift towards diversified, income-generating, and more liquid investments.

“This trend aligns with wider market observations across emerging economies, where affluent investors are recalibrating portfolios in response to changing return profiles, macroeconomic uncertainty, and evolving capital preservation strategies,” says the consultancy firm.

Mark Dunford, Knight Frank Kenya Chief Executive said while returns in real estate depend on type of asset and where in the life cycle the property is, returns range between eight to 12 per cent.

But there are pockets of the sector where spaces are unoccupied or there is an oversupply hence lower returns.

“Right now, with a lot of infrastructure work going on, and there are government bonds being offered, there are enticing alternatives to real estate,” said Dunford.

He explained that real estate has become a long-term type of an asset where one buys and holds it for value appreciation into the future.

“People are looking at paper as a higher yielding or liquid investment than real estate,” he said.

The Sh5 trillion NIF, a President William Ruto initiative seeks to crowd in private capital for infrastructure projects, having raised over Sh300 billion from sale of part of government's shareholding in Safaricom and divestiture of once State-owned Kenya Pipeline Company.

Away from government, the private sector has also witnessed overwhelming response from the corporate bonds listed on the capital market. Firms like Safaricom, Family Bank, and East African Breweries have had their papers oversubscribed. 

According to the report, just as is the case with residential property, HNWIs are also slowing down on the commercial side.

According to the survey, more than half of respondents (55 per cent) reported that fewer than 10 per cent of their clients invested in commercial property in 2025. None indicated that more than 60 per cent of their clients had exposure to the sector.

This trend, the report says, is largely consistent with the previous year’s findings, when 50 per cent of respondents reported that fewer than 10 per cent of their clients invested in commercial real estate in 2024.

Looking ahead, Knight Frank says, sentiment remains similarly cautious as half of the respondents indicated that fewer than 10 per cent of their clients are expected to invest in commercial property in 2026, while none anticipated participation levels exceeding 40 per cent of their client base.

“The subdued investment appetite reflects several structural and market-specific challenges facing the sector. Notably, an oversupply of commercial real estate, particularly within the grade B office segment, has contributed to elevated vacancy rates and increased pressure on rental yields,” the report explains.

On the other hand, grade A office occupancy and rental performance remain strong, supported by the continued undersupply of high-quality prime office space.

“At the same time, investors are increasingly exploring alternative opportunities that offer greater flexibility, diversification, and potentially stronger risk-adjusted returns,” it adds.

 Boniface Abudho, Research Analyst Knight Frank Africa, pointed out that investors are diversifying rather than abandoning property.

“Capital is moving towards sectors supported by structural trends that are expected to shape the economy of many years,” he said.