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Pension fund property exposure up in Q2

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UK – Insurance companies and pension funds increased their exposure to commercial property in the second quarter of this year, according to DTZ Research reporting on data published by National Statistics (NS), the UK’s official government statistical research body.

According to DTZ, the value of the increase was £1.3bn (€2.1bn) - almost 15% up on the first quarter’s result.
Taken on a yearly basis though the total is actually 25% down on the £6bn posted overall last year.

Attracted by the relatively high and stable income stream that is available from commercial property, pension funds were the keenest investors, accounting for £912m against insurance companies’ £368m.

DTZ believes that, although affected by market conditions, interest in property as an asset class will remain above average in the long term, despite the NS latest data supporting views that institutional investment activity in property this year has not thus far matched last year’s record levels.

Says Mike Cutteridge, head of investment at DTZ Debenham Tie Leung : “The outlook for institutional investment in property is finely balanced. Against a background of considerable economic uncertainty and dramatically falling equity prices, real estate performance cannot be immune. However, with its bond like characteristics and reasonable supply/demand balance, the sector may provide some protection for investors. Much will depend upon asset allocators’ assessment of whether a new risk reward relationship is emerging favouring property as an asset class.”

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