U.K. real estate investors up their exposure to U.S. market

Sentiment among U.K. commercial property investors towards the United States has risen dramatically over the past 12 months as enthusiasm for their home market as well as Germany continues to cool, according to BrickVest’s latest commercial property investment barometer, the Barometer.

Data from BrickVest’s U.K. investors shows a 24 percent year-on-year increase in sentiment from fourth quarter 2017 to fourth quarter 2018 towards U.S. real estate.  The United Kingdom, however, fell 8 percent in the last quarter alone, fuelled by continued Brexit uncertainty while Germany dropped by 5 percent year-on-year.

The United States (18 percent) is now the third most popular real estate investment destination among British investors, just behind second placed Germany (19 percent) and the United Kingdom, which remains the dominant market (43 percent) despite Brexit turmoil.

As fear of a turn in the cycle mounts, the barometer shows that investors’ risk appetite has plummeted over the past 12 months away from high-risk strategies (down by 23 percent) such as speculative development in favor of moderate risk schemes (up 26 percent).  Well over half (56 percent) of real estate investors now favor moderate risk strategies, the highest level since 2016.

However, capital growth and income remain the two key drivers behind U.K. real estate investors, reaching 48 percent and 39 percent in the last quarter.

Emmanuel Lumnieau, CEO at BrickVest, commented, “Facing stormier waters both at home and in mainland Europe, U.K.-based investors are increasingly looking toward United States for viable investment options in order to diversify their portfolios and protect their investments. As the economic outlook for the United States remaining positive for 2019 we can expect their exposure to rise.

“With many investors feeling that the market is coming off a peak, it’s no surprise that support for high risk strategies has fallen so spectacularly in favor of moderate risk opportunities, which still offer attractive returns but with more downside protection.”

The full report is available at: https://brickvest.com/barometers