Almost half of the real estate investors polled in INREV’s 2014 Investor Intentions Survey expect to increase their allocations to the sector.
The survey of 142 European, north American and Asian investors found 48.9% of European respondents expected to increase their portfolios and only 6.8% planned to trim them. Among Asian investors the figure was higher, with 53.8% expecting to increase allocations, which would boost the average weighting from 6.8% to 8.2%.
North American investors were the least enthusiastic: 26.9% expected to increase allocations and 61.5% said the allocation wouldn’t change. INREV noted a division between larger and smaller investors’ product preferences, “with larger investors looking at club deals and joint ventures while smaller investors remain committed to funds”.
Fund of fund managers – 15 took part – expected to reduce their allocation to funds in favour of joint ventures and clubs, with 60% planning to invest more in this way. At the survey’s London launch last week, there was surprise that more than half of the investors surveyed said lack of suitable funds was their top reason for not investing in funds.
In recent surveys, lack of proper alignment with fund managers was the top bugbear. Noel Manns, principal of Europa Capital Partners, said more regulation, such as the Alternative Investment Fund Managers Directive, might be a barrier to new entrants.
Germany and the UK were still the top investment picks, the UK being the most sought after market for international investors. A quarter of investors are targeting real estate debt, particularly large ones. Large investors were also the most interested in higher-risk, value-added investing.