Institutional investors are looking to increase their allocations to real estate to greater than 10% of their overall portfolios over the next two years, according to a new survey by the European Association for Investors in Non-Listed Real Estate Vehicles.
The association's latest Investment Intentions Survey, published Friday, showed that, on average, institutional investors expect to increase allocations to 10.3% of their portfolios, from the current 9.5%.
Respondents said they expect to invest a collective €35 billion ($47.9 billion) in real estate globally in 2014.
The strongest demand is from Asia-Pacific investors, with 53.8% expecting to increase allocations over the next two years and 38.5% not looking to change. Similarly, 48.9% of European investors say they expect to increase flows to real estate, while 44.3% do not expect to alter their allocations. North America, however, is more cautious, with 26.9% planning to increase allocations and 61.5% not looking to change.
Real estate is attractive as a way to diversify investments, INREV said in a news release accompanying the survey, which was conducted in late 2013 with 142 institutional investors.
Real estate debt and mortgage debt were popular investment targets for the next two years, with 25.2% of investors expecting to increase allocations, and 17.1% not seeing any change.
“These results show a stabilization of confidence amongst investors with increased allocations to real estate, which is good news for the sector,” said Casper Hesp, INREV's director of research and market information, in the news release. “There are also signs of a potential change in emphasis with investors searching for the optimum way to structure their portfolios to achieve the ideal investment mix.”
Mr. Hesp wasn't available for further comment.