UK-Based Investors in Real Estate – July 2013

by Carla Henry

  • 10 Jul 2013
  • RE

UK-based investors provide a significant source of capital for the real estate asset class, with investors of various sizes allocating to property. Twenty-five percent of these investors have assets under management of less than £500mn, 16% manage portfolios of £500mn to £999mn and 39% of these institutions are currently managing assets of £1bn to £4.9bn. Eight percent of UK-based investors manage portfolios worth £5bn to £9.9bn compared to 7% of investors with £10 to £19.9bn in total assets. Only 5% of UK-based investors in property have more than £20bn in assets under management. Seven percent of UK-based investors allocate less than £10mn to property, whereas 24% have real estate allocations between £10mn and £49mn. Forty-four percent of investors based in the region allocate between £50mn and £249mn to real estate, compared to 11% of investors holding real estate portfolios of between £250mn and £499mn. Six percent of investors have real estate allocations between £500mn and £999mn and a further 8% allocate over £1bn to the asset class.

UK-based investors have a strong preference for lower-risk core vehicles, with 84% of such investors having a preference for these funds, compared to 30% favouring value added strategies and 29% considering core-plus funds. Twenty-two percent of UK-based investors have a preference for opportunistic vehicles and 17% favour fund of funds strategies.

UK-based investors typically have a strong preference for investing in private equity real estate funds domestically, with 97% having a preference for investing in Europe-focused vehicles. Twenty-two percent are interested in gaining exposure to Asian markets through private real estate and 19% have a preference for North American real estate funds. Only 3% of UK institutions will seek investments in South America, whereas 2% will look to allocate capital to vehicles in Australasia and 1% will seek opportunities in Africa.

When comparing UK-based institutions to other investors, allocations to the asset class do not differ significantly. However, only 7% of UK-based real estate investors have an allocation of less than 2.5%, compared to 18% of all other real estate investors which allocate below 2.5%. Around 24% of UK-based institutions have an allocation of between 5% and 7.4%, compared to 22% of all other institutions. Although 12% of all other investors allocate between 7.5% and 9.9% to real estate, this figure is slightly lower than the 20% of UK-based investors that allocate between 7.5% and 9.9% to private real estate.

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