UK institutional investors are set to increase investment in the domestic residential market, according to research by the Investment Property Forum.
The IPF’s survey of 48 investors revealed a positive outlook for investment in the residential sector by UK institutions.
The majority of existing investors plan to increase their investment in the sector over the next 12 months, IPF said. Depending on the availability of stock, the IPF estimates that new investment could exceed £5bn (€6.3bn).
Almost four-fifths of contributors to the survey (37 out of 48) have an exposure to residential assets in their UK portfolios, with a cumulative value of £13bn, or around 6.3% of all UK real estate assets.
Direct ownership remains the preferred method of holding residential property, with 58% of all residential assets.
Around a half of respondents to IPF’s survey invest via joint ventures, with a third of respondents using private funds.
Gaining exposure via listed property company shares, however, has limited appeal – with only five investors from IPF’s sample taking this approach.
Residential development currently attracts around a quarter of total investment. IPF said 22 contributors provided data on their development activities, with a gross development value of up to some £9.8bn.
More than 50% of the current pipeline is earmarked for disposal, with 12 contributors to IPF’s survey intending to sell upon completion. Only four respondents are building exclusively to rent.