Logistics and living sector assets are expected to top capital deployment lists for cross-border capital this year, according to research by Knight Frank.

Knight Frank believes investors face a six- to nine-month window to capitalise on current pricing in an environment of weaker international competition. Opportunities are expected in the residential, logistics, education, healthcare and lending sectors where there are structural tailwinds.

“Pricing opportunities, private capital, polarisation and loan maturities will all be key in shaping market dynamics over the year ahead, as well as selective contrarian investing,” said Victoria Ormond, head of capital markets research at Knight Frank.

“We predict logistics and living sectors to be the two top sectors for inbound flows, followed by offices, retail and hotels, respectively – the latter two sectors potentially seeing the best year in a while in some locations.”

Knight Frank’s Capital Gravity Model, which forecasts the movement of cross-border real estate capital for 2024, forecasts that Japan could be set for its best year on record for outbound investment, with Japanese investors set to target mainly the US (35%) and the UK (26%).

The US is expected to be the top source of cross-border capital, which the UK is set to be the biggest beneficiary of, with $13bn (£10.4bn) waiting to be deployed into the country. This includes $7bn (£5.6bn) from private equity, with a particular focus on logistics. This will be followed by the living sectors, offices, hotels and retail.

Neil Brookes, global head of capital markets at Knight Frank, said: “There is no shortage of dry powder following a period of relatively subdued inactivity among several global investors over the past 18 months, with many well below their deployment targets. Given the shortage in investment grade supply in many markets, we expect to see buyers increasingly taking on development to build out stock, before exiting through sale to institutions or more passive investors.

“Additionally, investor groups such as pension funds looking to grow their global beds and sheds portfolios, in many cases through JVs, because of secular tailwinds fuelling income and capital value growth prospects.”