UK investors ‘aggressively’ looking to deploy capital

UK investors are “aggressively” returning to the real estate market as they eye the potential for getting deals near the bottom of the market.

British plan sponsors are among the few institutional investors actively looking to deploy capital in property markets, and property funds, globally in 2010, according to Aviva Investors’ chief investment officer Ed Casal.

For many investors, they don’t want to do anything in 2010. There is another big group of investors who are starting to put their toe in water this year. Only a small group of investors has made commitments already or are about to pull the trigger on a commitment.

Aviva Investors’ chief
investment officer Ed Casal

Speaking to PERE, Casal said UK investors were particularly keen on deals, funds and managers in their own back yard, and with a preference for low risk, core strategies. However, British plans were also looking overseas for opportunities, not least with managers with a global focus.

With general uncertainty about real estate fundamentals worldwide, Casal said limited partners were keen “to do core once again”, not least in developed, “global gateway” cities such as London and New York.

In the US, institutional investors have largely been slow to making new commitments as they review existing relationships and investments, and cautiously eye developments in the wider US economy, particularly in relation to unemployment and economic growth.

As such, private fund managers were finding only a handful of investors willing to “pull the trigger” in terms of new commitments, said Casal. “For many investors, they don’t want to do anything in 2010,” he said. “There is another big group of investors who are starting to put their toe in water this year. Only a small group of investors has made commitments already or are about to pull the trigger on a commitment.”

For international investors eyeing opportunities in the US, Casal said public real estate vehicles were benefitting from the liquid nature of their funds. Indeed, he said, many open-ended vehicles were now beginning to see a “swing from redemption queues to subscription queues. That’s being fuelled by international money looking to come to the US and to take on core investments,” Casal added.