Thirty-four percent of institutional investors believe the biggest real estate investment opportunities are to be found in the office sector, while the same percentage say the hotel & hospitality industry will present the best opportunities for commercial real estate over the next 12 months, according to a new study by real estate investment firm BrickVest.
BrickVest’s study showed that three in ten (31 percent) institutional investors thought the industrial sector would present the biggest commercial real estate investment opportunities over the next 12 months while one in five (19 percent) cited the retail & leisure sector.
The research also revealed that 44 percent of institutional investors expect commercial property yields to increase in the next 12 months, with just 22 percent saying they believe yields will decrease. Moreover, 40 percent of investors plan to increase their allocation to European commercial real estate.
“Through our online investment platform we continue to see rising demand for high quality commercial real estate, especially in the form of debt like investment opportunities which offer good risk adjusted returns in a volatile market environment," said BrickVest CEO Emmanuel Lumineau in a statement. "We expect to see the highest level of volatility from the office sector as many international firms currently headquartered in the UK may put decisions on hold over their long-term office space requirements. If the UK no longer gives businesses access to the European market, they may need to spread their staff across multiple locations to more efficiently access both the UK and European market.”
BrickVest’s research showed that the main challenge facing institutional investors when investing in commercial real estate is a lack of liquidity. Some 58 percent of investors highlighted this option. Meanwhile, more than a third cited that regulatory and compliance reporting costs are too high while the same number felt real estate projects did not match the criteria (e.g. location, risk, investment return). Another 33 percent said they thought the process is too slow and inefficient, while 22 percent said they didn’t think there was enough access to their investment.
The study also highlighted the ways that institutional investors plan to access commercial real estate investment opportunities over the next 12 months. Despite the overwhelming majority (79 percent) of respondents selecting property funds and REITs, 19 percent said they plan to do so through a direct investment platform.
"BrickVest is a truly pan-European platform that offers unique levels of liquidity to a traditionally illiquid asset class. We have attracted institutional sponsors and the trust of thousands of investors and family offices that see BrickVest as a Solution platform," Lumineau continued. "In particular, strong interest has convinced the board to accelerate the development of our product range with the launch of dedicated products for larger ticket investors, coupled with an automated liquidity platform and risk rating analytics."