Investors Optimistic about UK and European Commercial Real Estate Markets
Posted by The Landsite on 17th January 2024 -
Good news for property investors!
A comprehensive survey conducted by Alvarez & Marsal (A&M), engaging 101 real estate fund managers worldwide, reveals a heightened sense of optimism regarding real estate investments over the coming 12 to 18 months, even in the face of a challenging macroeconomic environment.
Based on the research findings, 80% of these investors expressed plans to make substantial investments in the next 12 to 18 months, primarily targeting Europe and the UK. Region-wise, 50% of the respondents in the poll said they were investing in the UK. and Europe, followed closely by North America (45%). About a third said they were investing in Asia. Within the European continent, the UK attracted investments from the majority of the respondents, at 35%. About 17% of investors invested in Germany, 14% in France and 11% in Spain.
The focal points of these investments are centred around the hospitality and leisure sectors, alongside strategic repositioning for offices and retail spaces.
- 56% of investors are optimistic about investing in the UK over the next 12 – 18 mths
- 86% expect to invest in hospitality and leisure properties
- 71% of investors plan to invest in offices
- 67% look to invest in retail
Despite office attendance being well below the pre pandemic levels, there are signs that businesses are searching for high quality office space in prime locations as they continue efforts to draw staff back to the office.
The commercial real estate market has faced challenges posed by tightened credit conditions on a broad scale, compounded by a persistently weak economic backdrop. Despite the difficulties, the optimism among investors for the next 12 to 18 months suggests an improvement following a potential trough in the coming months, particularly as central banks begin lowering rates.
Furthermore, the survey highlights a striking consensus among investors, with an overwhelming 97% emphasising the importance of Environmental, Social, and Governance (ESG) considerations in their investment strategies. Key areas of focus for ESG-oriented investors include energy-efficient upgrades, smart building technology, and green building certifications.
How Smart Buildings Contribute Towards ESG Goals
The report is based on data from online surveys conducted by Alvarez & Marsal among 101 real estate fund managers and investment professionals from 15 countries in Europe, North America and Asia. Funds in the survey, which include institutional capital, private capital firms and sovereign wealth funds, have assets under management (AUM) of $62.5 billion, on average. The survey was conducted in November 2023 and comprised a questionnaire of 19 questions. You can find a full version of the study here:
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