UK-Based Private Real Estate Investors: A Breakdown – September 2015

by Charles Wood

  • 30 Sep 2015
  • RE

With a stable political landscape and the second largest economy in Europe, the UK is among the most preeminent real estate investment locations in the region. Preqin’s Real Estate Online currently tracks 495 UK-based institutions that are investing in the real estate asset class. These investors have combined assets under management (AUM) of £2.8tn, representing a substantial proportion (15%) of the total AUM of all Europe-based real estate investors.

The majority of UK-based investors gain exposure to the asset class through private real estate funds, with 76% implementing it as a route to market, while direct investment in property is employed by a large proportion of investors (45%). In contrast, only 17% of UK-based investors gain exposure to real estate through listed securities.

In terms of the geographic preferences of UK-based private real estate investors, the vast majority (95%) have a preference for Europe-focused vehicles; 61% of UK-based investors maintain a specific preference for West Europe-focused funds. Contrastingly, only 4% of UK-based private real estate investors will target Central & East Europe- and Nordic-focused vehicles specifically, preferring instead to gain access to these markets through pan-European funds.

UK-based real estate investors gain access to the real estate market via a range of strategies, although lower risk core funds are targeted by the largest proportion of these investors (84%). This is followed by value added vehicles (36%), core-plus funds (33%) and opportunistic vehicles (29%).

One of the largest investors by allocation to real estate is Church Commissioners for England. The £6.7bn endowment plan has 33% of its AUM (£2.2bn) invested through all routes to market, although the majority (85%) of this allocation is invested in direct property holdings. A number of UK institutions are targeting further private real estate investment in the next year, including Lancashire County Council Pension Fund. The public pension fund will invest one-third of this in core strategies, with the remainder invested in value added and opportunistic funds.

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