More than half of the UK's institutional pension funds are planning to increase their commercial property investment allocation - despite the dramatic falls in values since 2007, according to new research published on Monday by global real estate investment manager Prupim and the Pensions Management Institute (PMI).
More than half of the UK's institutional pension funds are planning to increase their commercial property investment allocation - despite the dramatic falls in values since 2007, according to new research published on Monday by global real estate investment manager Prupim and the Pensions Management Institute (PMI).
A survey of leading pension fund managers and trustees, managing an estimated £140 bn (EUR 153 bn) in assets revealed that 52% expect to increase their investment in commercial property in global and domestic markets between now and 2012. Fewer than one in six respondents expect to lower their fund's exposure, according to the study.
'After a traumatic period for commercial property, institutional investors appear attracted to the relative cheapness of the asset class compared to other alternatives; the bargains available for cash-rich institutional buyers and the traditional advantages of diversification,' said Professor Paul McNamara, head of Research at Prupim.
McNamara was commenting as he unveiled the annual What’s on the Horizon 2009, Real Estate Investment for UK pension funds report on Tuesday at the PMI Autumn Conference.
'While institutional investors appear to have a greater appetite for commercial exposure, they are taking a back-to-basics approach. They are tending to favour more mainstream vehicles over exotic alternatives; are expecting lower, steadier returns, and they prize clear investment processes and strong operational risk management above all other factors in a successful fund manager,' he added.
More than 80% of respondents plan to increase or maintain their exposure to commercial property.
