Investors are looking to increase their exposure to commercial property despite a downbeat view of the economic prospects for the sector.
The paradoxical view of the market was revealed by the latest Lloyds Bank Wholesale Banking & Markets Commercial Property Confidence Monitor, which takes the temperature of 416 of the bank’s borrowers.
It found that major businesses and fund managers are the biggest prospective investors despite their pessimism for the sector’s immediate performance, with 65% and 58% respectively intending to increase their exposure in the next 3-6 months.
This came despite half the fund managers questioned expecting the UK commercial property market to slow down over the same period.
Just 4% expected it to improve.
Lloyds bank wholesale banking and markets managing director of corporate real estate, Lynda Shillaw, said: “Funds are sending a clear signal that they want to increase their allocation to real estate and this is shared by most respondents. Their intention to invest is likely to be linked to perceived long-term returns and shifts in their asset allocation strategies and the real estate funding market.
“While there is clearly pessimism surrounding immediate prospects for market activity, portfolio performance and in some cases property valuations, investors are nevertheless seeing the opportunity for longer-term value growth when buying at today’s prices.”
jack.sidders@estatesgazette.com
