Advisers are increasingly turning to property investments as they seek diversification, according to a survey by Time Investments.
The firm’s researchers questioned a pool of financial advisers and wealth managers on their asset allocation strategy and found 70% of them are targeting a substantial property allocation of between 11% and 20% for their clients.
More than two thirds (67%) of the advisers surveyed are using UK direct property funds and 30% are allocating to listed property funds such as REITs.
The researchers found over half of respondents (53%) expect to increase their clients’ allocation to direct property over the next 12-to-24 months, with 47% keeping allocations the same.
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Time Investments said the research indicates the increased focus on investing in property funds is driven by a desire to de-risk portfolios through diversification, followed by an increased focus on ESG.
Close to all advisers and wealth managers questioned (98%) said they are open to ‘hybrid’ property funds, which provide a blend of direct property and listed securities such as REITs.
Roger Skeldon, head of real estate at Time Investments, said: “The outlook for UK property is looking positive. In the physical property sector, yields are stabilising, and rental growth will be the key driver of returns.
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“We are seeing a positive reaction to the recent interest rate cut and there is more diversity in the larger REITs as the UK market has matured, meaning exposure can be more effectively spread across different property sub-sectors.
“Our research shows that advisers and wealth managers are increasingly looking to property investments as a route to diversification and a way to help their clients achieve attractive risk adjusted returns, without the volatility associated with mainstream equity investments.”
