Research - OCTOBER 11, 2017

Office and hotel sectors to provide biggest property investment opportunities

by Andrea Waitrovich

More than a third (34 percent) of institutional investors believe the biggest real estate investment opportunities will be found in the office sector and the same number in the hotel & hospitality industry over the next 12 months, according to BrickVest.

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 revealed that 44 percent of institutional investors expect commercial property yields to increase in the next 12 months, just 22 percent believe they will decrease. Moreover two in five (40 percent) 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 Emmanuel Lumineau, CEO at BrickVest. “We expect to see the highest level of volatility from the office sector as many international firms currently headquartered in the United Kingdom may put decisions on hold over their long-term office space requirements. If the United Kingdomno longer gives businesses access to the European market, they may need to spread their staff across multiple locations to more efficiently access both the United Kingdom 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. Nearly three in five (58 percent) highlighted this option. More than a third (36 percent) cited that regulatory and compliance reporting costs are too high while the same number felt real estate projects did not match the criteria (location, risk, investment return). A third (33 percent) thought the process is too slow and inefficient and one in five (22 percent) 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 (49 percent) and REITs (30 percent), one in five (19 percent) plan to do so through a direct investment platform.

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