According to analysts’ forecasts, based on a survey of investors’ five-year views, investment in the UK’s real estate sector will grow to £20 billion (€25.5 billion); by 2019. Why the sudden interest in investment? Some say this 82% increase can be attributed to alternative investments becoming much more appealing and acceptable, to institutional investors.
The survey found that 90% of investors intend to increase their exposure to real estate holdings, over the next five years. By how much? On average, respondents said they were looking to increase their allocation to alternative investments by 9%, over the same 5 year period.
“As we move towards 2019 and beyond, with what indicates to be an ever-increasing investor appetite, it’s likely many of these assets will break out of the alternatives bracket and become a more mainstream choice for investors.” – Mr. Chris Ireland, UK Chairman & Lead Director of Capital Markets at JLL
According to a report from Real Capital Analytics, Europe remains a major draw for North American and Asian capital. Canadian investors and their American counterparts continue to target European property for investment. In the United Kingdom alone, the U.S. dollar has dominated investment this year, with an estimated €8.3 billion invested in the first nine months of 2014. On the other hand, Asian investment in European property is still in its infancy.
The higher investment returns, relative to conventional real estate investments, as well as greater expertise in investing in alternatives; will also drive investment volumes in the sector up. Sometimes referred to as “the beginning and end of adult life” (student housing and retirement homes), are regarded as potential growth sectors. Both of these investments, which have already attracted significant institutional capital, may very soon find themselves reclassified as mainstream investments.
Recent reports suggest that key points of interest for investors investing in real estate will be student housing, expected to increase 70%, as well as hotels and hospitality; with a 69% increase in investment.