Recovery was the priority in 2021, as the industry navigated its way through pandemic conditions to find continued success in uncertain times. The ‘new normal’ has caused many to reassess their investment choices and has changed the desirability of different assets.
Retail assets have been competing with the rise of e-commerce, which accelerated during the worldwide lockdown when online shopping was, for many, the only option. The future of office assets is being questioned now that formerly appealing qualities such as a prime location and high-spec features are no longer the only priority for tenants and buyers.
Institutional investors were asked about their objectives in 2022 as part of this study, including how they plan to invest in different fund strategies over the next 12 months, and how their plans will be implemented in different sectors this year.
PERE’s Investor Perspectives 2022 Study aims to provide a granular view of the market, both current and future, by gathering insight on investors’ asset allocation, propensity to invest and performance predictions.
It is a global study, reflected in the question set and the respondents, which allows for cross-regional comparisons across alternative asset classes. The question set is reviewed annually, with the objective of reflecting market developments and shifts in sentiment. For this 2022 study, PERE’s Research & Analytics team surveyed 111 institutional investors. Fieldwork was carried out from August to September 2021, and participation in the study is always anonymous.
Favored investments in 2022
When participants were asked about investments their organizations currently favor, the results demonstrated how certain sub-sectors within the main asset classes have become top picks
For offices, over one-third of institutional investors said that medical offices and science parks were the preferred investment of choice. Large offices in city centers continued to be popular, despite questions about traditional office properties’ potential obsolescence. Conversely, just 8 percent of respondents reported that offices with a significant flexible-working component were favored investments for their organization.
Inner city malls and high street retail were seen as the most favorable retail investments across investors surveyed, at 33 percent and 30 percent, respectively. Retail parks and out-of-town malls accounted for 30 percent and 7 percent, respectively, as the retail industry attempts to rebound from pandemic-induced closures in 2020. In the logistics sector, last-mile logistics properties were the most favored investment among 50 percent of participants, while large distribution warehouses accounted for 30 percent of the favorable vote as the e-commerce industry continues to drive growth in the sector.
Multifamily and PRS assets were by far the most favored investments among respondents, with 67 percent claiming that their organization is prioritizing these sectors in their investment decisions. The single-family sector was in the spotlight throughout 2021, particularly in the US, and 10 percent of institutional investors claimed this sector was the most favorable investment in their organization.