One in 10 real estate investors are planning to reduce their exposure to Western Europe, according to new research launched at MIPIM.
KPMG, which conducted the survey, attributed this mainly to the opportunity to sell into a highly competitive buyers’ market.
“Western Europe is slowly heating up and investors are keen to realise their gains and free up capital to invest elsewhere,” said Richard White, UK head of real estate at KPMG.
“Intense competition over prime assets has already forced some investors out of the market if they are unable to meet, or justify, the pricing levels.”
The findings were announced on Tuesday morning at RE-Invest, the closed-door summit for pension funds, sovereign wealth funds and other institutional investors.
The survey of investors with more than €580bn of real estate assets also found that the majority of investors (64%) were targeting investments globally, rather than in just one continent, up from 39% in 2014.
Greater access to capital and increasing confidence in market conditions was also causing in interest in less traditional sectors, KPMG found.
Suburban offices and high street retail are also back on the agenda, with 44% and 68% of investors planning to invest in the sectors over the next 12 months.
But nearly half (48%) of investors said a sustainable supply of suitable stock was the main threat facing their business and this had the greatest potential to constrain growth.
One in four also cited the performance of the global economy as an area of concern.
“The prolonged economic downturn caused a halt in speculative development and there are simply not enough finished assets to satisfy investor demand,” White said. “This mismatch between demand and supply is prompting fears of a price bubble in certain markets, which are simply becoming overcrowded.”
He added: “While investor confidence has significantly improved, it remains vulnerable to shocks. The recent slowdown in GDP across a number of the key global real estate markets has caused understandable concern within the real estate industry. Poor economic performance could cause investors to suddenly retrench to perceived safe havens of Western Europe, rather than venture further afield.”
