Three quarters (77%) of advisers, wealth managers and other investment professionals expect allocations to real estate to rise over the next 12 months in response to client demand.
Real estate valuations have suffered under the weight of higher interest rates, but it appears many advisers and their clients are anticipating a turnaround.
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Time Investments quizzed 200 professionals working for clients with over £200,000 of investible assets on their asset allocation views.
More than half (58%) of respondents said that for the average client the target allocation to real estate is 11-15%, while 26% said 6-10%.
When asked what is driving allocation to real assets such as real estate, the key factor cited by respondents was the desire to de-risk portfolios through diversification (68%), increased focus on ESG (61%), a desire for secure income streams (45%) and defensive investment strategies (44%).
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In terms of the real estate sub-sectors, respondents felt industrials offered the biggest investment opportunities over the next 12 months, followed by data centres and logistics, with student accommodation and supermarkets regarded as the least favourable.
Roger Skeldon, head of real estate at Time, said: “Our research shows that advisers and investment professionals are increasingly positive towards real estate, with allocation to the asset class set to increase over the coming quarters. This is being driven by factors which provide a counter to the current turbulent economic climate but also an increased focus on ESG.”
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