Institutional investors eying up commercial real estate hike

By Daniel Lanyon on Friday 8 September 2017

Alternative Lending

A large number of giant portfolios are increasing attracted despite the Brexit uncertainty.

Two in five (40 per cent) institutional investors plan to increase their investment allocation to European commercial real estate over the next 12 months despite Brexit uncertainty being the number one challenge. This is according to a new study with property-focussed institutional investors by BrickVest, the real estate investment platform.

The study highlighted that three in five (60 per cent) institutional investors believe Brexit uncertainty will be the biggest challenge facing European investors in commercial real estate over the next 12 months. Nearly half (46 per cent) thought political uncertainty would be the biggest challenge while nearly two in five (37 per cent) suggested it would be low economic growth. 31 per cent highlighted rising interest rates and 25 per cent felt it would be rising inflation. More than a fifth (22 per cent) cited increased regulation as the biggest challenge for investors over the next 12 months.

Despite these challenges, BrickVest’s research did highlight that Brexit could also present some European commercial real estate investment opportunities. Two fifths (39 per cent) of institutional investors felt that Brexit would increase the number of investment opportunities in European commercial property. Just 22 per cent felt the number of investment opportunities would decrease.

BrickVest, which launched 18 months ago remains the only pan-European online crowd investing platform that allows its community of investors to invest directly in commercial real estate investment.

The firm announced its first successful exit alongside CORESTATE Capital Group, the residential portfolio and commercial real estate markets investment firm, featuring a sizeable national German retail portfolio of 23 assets. European investors who invested in the BrickVest Fund Harvest 1 LLP have achieved returns of 31 per cent.

Emmanuel Lumineau, CEO at BrickVest, says commercial real estate has seen increased inflows from institutional investors for a number of years.

"Clearly Brexit has created some uncertainties and will certainly present challenges for institutional real estate investors, however our research shows that European investors believe investment opportunities could increase. Since the vote in June last year, we’ve seen a huge increase in the number of investors joining the platform. We are experiencing strong levels of demand from investors for property as an asset class and it is clear that many of our users want to take advantage of the vote,” he said.

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