Pension funds and other institutional investors are increasing their exposure to real estate funds that offer a social benefit, according to research commissioned by Alpha Real Capital.
The research revealed that 80% of European professional investors now have social real estate firmly on their radar as an investment opportunity and over the next two years around 30% expect pension funds and other institutional investors to increase their allocation to funds offering a social benefit.
The survey which polled 55 professional investors in the UK, Germany, Ireland and the Netherlands, found that 93% took social benefits and impacts into consideration when assessing real estate investments and 96% now regarded the presence of social benefits as important to their investment decision-making process.
Adrian D’Enrico, head of social real estate at Alpha Real Capital said the recent UK Government’s Investing in a Better World report revealed the growing demand from investors to ensure that their investments not only avoid causing harm, but they also want them to support people and the planet.
“Alpha’s research clearly demonstrates there is a growing trend across all investors – institutional and retail – to actively look for investments that have a positive social benefit and we see this trend accelerating.”
According to D’Enrico, there is a very strong, multi-factor investment opportunity emerging in social real estate.
“A growing and ageing population will need access to more assets and services provided in social real estate, but the sector faces significant challenges around insufficient and inadequate stock,” he said.
D’Enrico adds that any response from the public sector will be hampered by strained government finances at a central and local level, which have been put under increased pressure with the immediate costs of dealing with the COVID-19 pandemic.
“This reinforces the opportunity for private capital to assist in funding and delivering assets - an opportunity we estimate would be well over £50bn.”
Adrian adds that there is little doubt that pension funds and other institutional investors are increasing their exposure to real estate investments offering clear and measurable social benefits.
”Furthermore, our research suggests that the current coronavirus crisis may speed up this trend. It is also clear that many professional investors have a good understanding of what to look for when considering social real estate and feel confident in the decisions they make here.”
Phillip Rose, CEO at Alpha Real Capital, said: “Investing in social real estate is one route for investors to make a positive impact on society while at the same time achieving predictable cashflows over long periods of time with significant component of returns linked to inflation”.
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