Nearly two thirds (64%) of institutional investors believe the biggest investment opportunities will be found in the office sector over the next 12 months, according to a new study1 with 103 property-focussed institutional investors by BrickVest, the real estate investment platform. This represents a significant increase from the same study in October 20162 where just one in five (20%) selected this option.
BrickVest’s study showed that two in five (42%) institutional investors thought the industrial sector would present the biggest commercial real estate investment opportunities over the next 12 months, down from 44% in October. Three in ten (30%) selected the hotel sector, up from 20% last year, and a quarter (24%) cited the retail & leisure sector, down from 27% last year.
The research revealed that half (48%) of institutional investors are planning to increase their allocation to commercial real estate over the next 12 months. Just 8% said they would decrease it. Nearly two in three (64%) institutional investors believe the number of real estate investment opportunities will increase over the next five years.
Emmanuel Lumineau, CEO at BrickVest, commented: “Through our online real estate investment platform we are already seeing opportunities for investors in the UK and European real estate market, especially in the form of debt like investment opportunities which offer good risk adjusted returns in a volatile market environment. Since the Brexit vote in June, we’ve seen a 72% increase in the number of investors joining the platform.
“We expect to see the highest level of volatility from the office sector as many international firms currently headquartered in the UK may put decisions on hold over their long term office space requirements. If the UK no longer gives businesses access to the European market, they may need to spread their staff across multiple locations to more efficiently access both the UK and European market.”
The study identified the main challenges that institutional investors face when investing in commercial real estate. Nearly half (48%) suggested it was lack of liquidity while 42% pointed to the initial fee being too high. Two fifths (40%) highlighted high regulatory and compliance reporting costs, while the same number said they couldn’t find projects that matched their criteria (e.g. location, risk, investment return).
One year after its launch, BrickVest has built the only pan-European online Real Estate platform that allows its community of international investors to invest directly and actively manage their investment in institutional grade commercial real estate. Investors can access real estate that previously was only accessible to large institutions such as pension funds, insurance companies and large family offices. The firm offers a range of investment opportunities allowing investors to select an opportunity based on the preferred asset class, geography and return profile.
Emmanuel continues: “BrickVest is a truly pan-European platform that offers unique levels of liquidity to a traditionally illiquid asset class. We have attracted institutional sponsors and the trust of thousands of investors and family offices that see BrickVest as a Solution platform. In particular, strong interest has convinced the board to accelerate the development of our product range with the launch of dedicated products for larger ticket investors, coupled with an automated liquidity platform and risk rating analytics. This additional funding will enable us to continue investing in our in-house technology and scaling our innovative platform in line with soaring levels of demand for accessible real estate investment.”
1Research carried out online with 103 property focussed institutional investors in April 2017
2Research carried out online with 96 property focussed institutional investors in October 2016