Two in five (40 percent) institutional investors plan to increase their investment allocation to European commercial real estate over the next 12 months despite Brexit uncertainty being the number one challenge, according to BrickVest.
Emmanuel Lumineau, CEO at BrickVest, commented: “Since the vote in June last year, we’ve seen a huge increase in the number of investors joining the platform. We are experiencing strong levels of demand from investors for property as an asset class and it is clear that many of our users want to take advantage of the vote.”
The study highlighted that three in five (60 percent) institutional investors believe Brexit uncertainty will be the biggest challenge facing European investors in commercial real estate over the next 12 months. Nearly half (46 percent) thought political uncertainty would be the biggest challenge while nearly two in five (37 percent) suggested it would be low economic growth. 31 percent highlighted rising interest rates and 25 percent felt it would be rising inflation. A fifth (22 percent) cited increased regulation as the biggest challenge for investors over the next 12 months.
Despite these challenges, BrickVest’s research did highlight that Brexit could also present some European commercial real estate investment opportunities. Roughly two-fifths (39 percent) of institutional investors felt Brexit would increase the number of investment opportunities in European commercial property. Just 22 percent felt the number of investment opportunities would decrease.
The firm announced its first successful exit alongside CORESTATE Capital Group, the residential portfolio and commercial real estate markets investment firm, featuring a sizeable national German retail portfolio of 23 assets. European investors who invested in the BrickVest Fund Harvest 1 LLP have achieved returns of 31 percent. In comparison, the FTSE EPRA/NAREIT Developed Europe Index generated a return of 18 percent over the same period.
What do you believe are the biggest challenges facing European investors in commercial real estate over the next 12 months?
| Brexit uncertainty |
60% |
| Political uncertainty
|
46% |
| Low global economic growth
|
37% |
| Rising interest rates
|
31% |
| Rising inflation
|
25% |
| Increased regulation |
22% |
| Property bubble
|
15% |
| Lack of supply
|
12% |
| Lack of demand from Asia
|
9% |
| Lack of demand from the Middle East
|
3% |
