UK real estate markets have fallen behind Germany and France as the target for institutional money for the first time this cycle according to the latest research from INREV.
According to the Investment Intentions Survey 2016 institutional investors will assign 13% more capital to the sector over 2016 than in 2015 with 41.9% of capital assigned to Europe.
In total 73.5% of investors are focused on Germany. Frances take over from the UK as the second most important target for global investors’ €48bn (£36bn) of capital. It is the target for 61.8% of investors compared to 58.8% for the UK.
Investors have also begun to move up the risk curve since 2015 with value add now the target of 46.8% compared to 41.1% in 2015. Core investments lost their appeal slipping from a target allocation on 41.1% to 39.4%.
Most of value-add’s gain therefore came at the expense of opportunistic investments which saw allocations slide from 17.8% to 13.8%.
US investors continue to be the biggest investors in real estate but South Korean investors have emerged as those looking to target the next largest to the sector.
In total Asian investors are expected to make up a fifth of the total €48bn assigned to real estate in 2016 with North American and European investors.
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