LONDON (Reuters) – More than a third of European investors plan to cut their real estate allocations over the next two years, trade group INREV said on Wednesday.
An INREV survey of 82 investors with approximately €800 million ($867.84 million) in assets under management found that 37% of European investors intend to reduce their exposure, compared to North American investors. of investors were 20%, and Asia-Pacific investors were 5%.
At the beginning of 2022, only 4% of European investors planned to cut back last year, according to the survey.
INREV is the European Association for Private Real Estate Investors.
European markets have been particularly hard hit by inflation and the energy crisis as a result of the war in Ukraine.
Rising interest rates are increasing the cost of leverage to invest in real estate, while other markets such as bonds are more attractive than they used to be, industry experts say. increase.
European investors currently hold 10.8% of their investment in assets, above the target of 10.5%, according to INREV research. The sharp drop in prices of other asset classes last year means real estate is a disproportionately large part of investor portfolios, the report said.
Capital values fell 1.6% in the third quarter of 2022 in the European private real estate sector. This is the biggest quarterly decline since the 2008 global financial crisis.
The decline in valuations was led by the UK, Iryna Pylypchuk, director of research and market intelligence at INREV, said at a media briefing.
More frequent valuations in the UK than in Europe means that UK real estate “reacts very quickly to market sentiment,” she said.
A liquidity crisis in late September prompted the UK pension system to rush to sell property and other assets.
($1 = 0.9218 Euro)
Reported by Carolyn Cohn.Editing by Susan Fenton
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