There is growing demand for new investment vehicles in the indirect property market in the UK. IPD has pointed out that this sector is "well suited" to the likes of retail investors and pension schemes, but noted that there is currently no provision for them within the British market. Speaking at the recent IPD RealWorld Conference, former chief executive officer of Cornerstone Iain Reid stated that multi-asset funds are the way to go.
"These are important, because property is screaming out as a suitable form of investment," he asserted. One of the main reasons why multi-asset funds should be considered is that they comply with new regulations relating to the capital and regulatory requirements of investment funds. Under these rules, investors will have to meet higher liquidity levels than previously.
In addition, real estate investments offer the possibility of diversification, which also appeals to investors. Earlier this month, Mandy Chiu, exchange-traded fund product specialist at HSBC Global Asset Management, said in an interview with Financial News that property's qualities as a diversifier are a strong attraction. "Real estate is now considered a form of safe haven because investors find more confidence in real assets," she asserted.
Paul Ogden, of InProp Capital, told the IPD conference that there is an imbalance in the market at present. He explained there are many institutions with commercial property holdings that are keen to offload these assets, while investors with a broader focus who do not specialise in the real estate industry want to have exposure to the sector. Mr Ogden concluded: "It is a serious market failure that this pool of risk is just sitting there and not being transferred." He added that real estate investment trusts will not provide a solution to the issue, as they are too closely connected to equities in the short term.
- Thursday 27 September 2012