"The growing consensus that interest rates have peaked suggests that the worst of the uncertainty may be behind us"
- Kersten Muller - Alvarez & Marsal
A major survey of 101 global real estate fund managers with an average of $62.5bn under management has found that 56% of investors feel optimistic towards the outlook for UK and European commercial real estate investments over the next 12 to 18 months, according to a new report from global professional services firm Alvarez & Marsal.
The investors surveyed highlighted the cost of capital and investment returns as the areas they are most optimistic about. 62% expect the cost of capital to improve and 59% expect investment returns to improve.
In terms of Europe, 75% of investors plan to increase their exposure to the Nordic markets, while 70% plan to increase their exposure to the UK.
Over the next 12 to 18 months, the survey found that investors are keenest to back ventures that cater to travel and leisure, work and shopping, with 87% looking to invest in hotel and leisure, 71% in office buildings and 67% in retail. The care home and assisted living sector is set to receive the least interest, with only 23% looking to invest in that sector.
The survey also found that investors are nearly unanimous in their views on ESG, with 97% saying that ESG forms an important part of their investment strategy. Energy efficient upgrades, smart building technology and green building certifications are the key focus areas for ESG-oriented investors.
Kersten Muller, Managing Director at Alvarez & Marsal said: “The growing consensus that interest rates have peaked suggests that the worst of the uncertainty may be behind us. While this could pave the way for a rebound in the real estate sector in 2024, investors should continue to exercise caution when evaluating the types of properties and markets they deem worthy of their capital.”
