Real estate continues to dominate 'alternative' asset class

Real estate continues to dominate 'alternative' investment asset classes, representing around two-thirds of total allocation, according to the new edition of the European Institutional Asset Management Survey (EIAMS) supported by Invesco Real Estate.

In 2009 and 2010, real estate was able to maintain its position in investor portfolios, the survey shows. The fixed income asset class has meanwhile seen its share of European institutional investors' portfolios increase, mostly at the expense of equities.

'European institutional investors are again embracing alternatives with a total allocation of 11.5% of respondents' portfolios invested in the sector,' said Simon Redman, Invesco Real Estate's head of Product Management.

He added: 'The allocation level is back up to and beyond the levels of 2007, when 10% was allocated to the sector. As in the previous two years, real estate forms the lion's share of this allocation, with 7% of investor's total assets in this category, compared to 6.6% in 2009.'

Real estate investing is now most popular with investors from the Benelux, pushing Switzerland into second place, followed by the UK and Ireland. In addition, smaller investors appear to be showing increased confidence in real estate. 'Around 26% of investors are poised to raise their real estate allocations, with only 7% planning to reduce this component in their multi-asset portfolios. Indeed, real estate is now at its highest level for the past three years and remains the cornerstone of alternatives investing,' Redman concluded.