New research from Principal Asset Management reveals a strong bias toward domestic markets among wealth advisors when considering real estate investment opportunities.
Over three-quarters (78%) of UK advisors believe the UK offers the best real estate opportunities, compared to 77% of German advisors favouring Germany, 88% of French advisors choosing France, and 55% of Swiss advisors preferring Switzerland.
UK advisors identify mixed-use (28%), data centers (26%), and retail (24%) as the subsectors offering the best risk-adjusted returns. Other sectors include offices (22%), healthcare (21%), industrials (21%), self-storage (21%), logistics (20%), residential (20%), and hotels (18%).
In contrast, German, French, and Swiss advisors overwhelmingly prefer industrials, with an average of 33% citing it as the top investment opportunity.
Alan Glendon at Principal Asset Management, said: ‘UK wealth advisers have identified real estate as a potential bright spot in 2024, amid what seems to be an uncertain year ahead. Real estate plays an important role in protecting portfolios against high inflation. Data centers in particular stand out as a compelling long-term investment opportunity, as through the datafication of social infrastructure the demand for data storage is only going to grow. However, the significant home bias evident in the research suggests that investors advising their clients should consider opportunities beyond their own economies when seeking risk-adjusted returns from this asset class and diversify across other markets.’
Principal Asset Management surveyed 400 wealth management advisors across the UK, Germany, Switzerland, and France (100 per market). All respondents represent firms managing at least $20 bn (€18.5 bn) in assets, with half exceeding $50 bn (€46.4 bn). The survey was conducted from 18 September to 2 October.
