Advisers are planning on increasing their clients’ allocations to property in the next two years, research has found.
This was part of a move to “de-risk” portfolios and have an increased focus on ESG.
Research from Time Investments showed 70 per cent of advisers and wealth managers were targeting between 11 and 20 per cent allocation to property as part of their clients’ portfolios.
With 67 per cent using UK direct property (funds that directly own physical assets) and 30 per cent allocating to listed property such as REITs.
The research also found investments in property funds could soon rise, with more than half of respondents expecting to increase their clients’ allocation to direct property in the next 12-24 months.
Roger Skeldon, head of real estate and fund manager at TIME Investments said: “The outlook for UK property is looking positive.
“In the physical property sector, yields are stabilising, and rental growth will be the key driver of returns. We are seeing a positive
reaction to the recent interest rate cut and there is more diversity in the larger REITs as the UK market has matured, meaning exposure can be more effectively spread across different property sub-sectors.”
The study also found almost all of the advisers and wealth managers asked would be likely to recommend a ‘hybrid’ property fund to a client, which provides a blend of direct property and listed securities such as REITs.
Some 70 per cent of this group said their ability to provide risk-adjusted returns made them attractive while 53 per cent said it was the diversification benefits.
Skeldon added: “Our research shows that advisers and wealth managers are increasingly looking to property investments as a route to diversification and a way to help their clients achieve attractive risk adjusted returns, without the volatility associated with mainstream equity investments.”
tara.o’connor@ft.com
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