The UK has slipped behind both Germany and France in the favoured destinations for real estate investment, according to a survey carried out by the European Association for Investors in Non-Listed Real Estate Vehicles.
Almost half of the €64.6bn (£57.4bn) of fresh money likely to be put to work in real estate globally during 2021 will target Europe, according to INREV’s survey of almost 100 global investors, with the next largest chunk targeting North America and then Asia Pacific.
The UK was the top-ranked European investment destination in the survey in 2017 and 2018, falling to second in 2019 and 2020, and now sits third. Germany and France have strengthened their positions and taken the top two spots. Germany and France are most notably in vogue with investors in Asia Pacific and Europe, while North American investors show a preference for the UK.
INREV’s team reasons that North American investors tend to have a higher appetite for risk and that the UK will offer greater distressed or repositioning opportunities.
Iryna Pylypchuk, INREV’s director of research and market information, said the diversity of opportunities in Europe appeared to be “somewhat of a sweet spot for both local, regional and cross-regional capital”.
Pylypchuk added: “With target allocations maintained or even increased in some cases, there is clearly room for more capital to find its way into the asset class. Non-listed funds are expected to see most of the new capital allocations in Europe, but an increase in allocations to joint ventures and club deals, especially by the larger investors, makes for an interesting period of activity ahead.”
Most survey respondents targeting Europe are looking to non-listed real estate funds and private REITs, with joint ventures and club deals favoured next. The survey also highlighted a likely rise in allocation to non-listed real estate debt.
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