Two in five (40 pct) institutional investors plan to increase their investment allocation to European commercial real estate over the next 12 months, so, despite Brexit European commercial property remains attractive. This is according to a new study with property-focussed institutional investors by BrickVest, the real estate investment platform.
The study highlighted that three in five (60 pct) 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 pct) thought political uncertainty would be the biggest challenge, while nearly two in five (37 pct) suggested it would be low economic growth. Thirty-one percent highlighted rising interest rates and 25 pct felt it would be rising inflation. A fifth (22 pct) cited increased regulation as the biggest challenge for investors over the next 12 months.
Despite these challenges, BrickVest’s said its research did highlight that Brexit could also present some European commercial real estate investment opportunities.
Two fifths (39 pct) of institutional investors felt that Brexit would increase the number of investment opportunities in European commercial property compared with just 22 pct who felt the number of investment opportunities would decrease.
BrickVest has 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 achieved returns of 31 pct, compared with the FTSE EPRA/NAREIT Developed Europe Index – which generated a return of 18 pct over the same period.
BrickVest CEO Emmanuel Lumineau, said: “Commercial real estate has seen increased inflows from institutional investors for a number of years now, as the asset class has become more and more mainstream. Clearly Brexit has created some uncertainties and will certainly present challenges for institutional real estate investors – however our research shows that European investors believe investment opportunities could increase. 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.”
|What do you believe are the biggest challenges facing European investors in commercial real estate over the next 12 months?|
|Low global economic growth||37%|
|Rising interest rates||31%|
|Lack of supply||12%|
|Lack of demand from the Asia||9%|
|Lack of demand from the Middle East||3%|
Source: BrickVest (August 2017)
BrickVest’s founding team has an extensive experience in real estate, investment services and technology, the company said. It added it is shifting its model on how to invest in real estate across the globe, by combining the best practices of institutional quality investing in real estate with cutting edge technology, first-class governance and regulatory framework that puts the investor first.
The firm said it has also continued to demonstrate its commitment to democratise best-in class governance and risk management standard, becoming the only European online real estate platform to gain a Full-scope AIFM license – the highest regulatory fund management standard in Europe – in an industry known for its opacity and lack of governance.
These vetted investment opportunities with strong risk management framework were previously only accessible to large institutions such as pension funds and insurance companies, BrickVest said.
Eighteen months after its launch, BrickVest remains the only pan-European online crowd investing platform that allows its community of investors to invest directly, and actively manage their investment, in institutional grade commercial real estate investment opportunities, the company said.