Independent financial advisors continue to back REITs

Despite ongoing turbulence on international stock markets and falling property stocks, a majority of independent financial advisors in the UK say they still plan to incorporate real estate investment trust (REIT) investments in client portfolios.

Since REITs were introduced in the UK in January of this year, property share prices have traded well below net asset value. Yet, according to the survey of over 240 UK-based financial advisors commissioned by Reita and conducted by NMB Research in the month of October, 52% of independent financial advisers confirmed they would expect to include REITs in their client portfolios, down just slightly from 54% in June. Forty-eight percent planned to invest in REITs through a collective investment scheme and an additional 4% directly.

Meanwhile, the volume of incoming client enquiries stabilised between June and October, with 19% of advisers surveyed receiving calls about REITs and property investments in both months. Nonetheless, the study showed that property weightings in investment portfolios have declined. While almost 30% of independent financial advisers recommended an allocation of 16%-25% of clients’ portfolios to property in June, this figure more than halved to 14% in October. Some 82% of analysts recommended weightings of 15% or less for property investments in October, up from 60% in June.

Among other research highlights, 43% of analysts surveyed said they would rank funds investing in the UK as their preferred property investment in the October survey, up from 36% in June. In contrast, support for direct investment in commercial property dropped to 26% compared to 32% in the June survey.

Reita is a REIT and quoted property group made up of 11 of the biggest quoted property companies in the UK, as well as fund managers, merchant banks, the London Stock Exchange, the British Property Federation, the Investment Property Forum and law firm DLA Piper. Click on the link below for the Reita website.