Investors from across the globe will be putting more capital to work in the real estate marketplace, according to a survey taken by New York-based global asset manager BlackRock’s largest institutional clients.
The 169 investors, representing $8 trillion in assets, surveyed said they are focused on growth rates in developed economies, divergent monetary policies and the potential for deflation. As a result, the investors predicted significant moves in their portfolios towards alternative investments and less traditional fixed income strategies.
Six in 10 investors polled said they anticipate increasing allocations to real assets and half plan to add to real estate.
“The trend towards alternatives isn’t new, but what is surprising is the level of conviction institutions have towards physical assets like real estate and infrastructure,” Mark McCombe, senior managing director and global head of BlackRock’s institutional client business, commented.
“We believe many institutions are structurally under-invested in real assets, and it is great to see they are more bullish on these strategies than they were 12 months ago.”
European investors were the most bullish about real estate with 69 percent saying that they plan to increase allocations to real assets, against 2 percent who said they would decrease allocations, while 66 percent plan to add to real estate versus 9 percent who said they would lower commitments.
In Asia Pacific, institutions were equally upbeat as 64 percent said they would add to their real assets portfolio and 54 percent said they would increase real estate allocations. More than a third of US investors said they would up their real estate commitments and 53 percent said they are looking to put more money into real assets.
The geographic split of the investors polled was: 40 percent located in North America, 29 percent in Europe, the Middle East and Africa, 20 percent in Asia Pacific, and 11 percent in South America.