Pension funds want to invest more in real estate

According to studies, a combination of higher yields and ESG has increased desire for real estate investing.

Downing LLP, an investment manager, commissioned research that revealed that 86% of 50 UK defined benefit (DB) pension fund directors desire to enhance real estate development allocations. Almost half of those polled, or 48%, stated that "support for ESG is driving increasing allocations by DB schemes in real estate development finance."

58% thought the potential to give attractive yields would also drive allocations. According to Parik Chandra, partner and head of specialty lending at Downing LLP, "real estate development funding is moving up the agenda for pension scheme managers." The business questioned 50 UK pension funds, which handle a total of £125.5 billion in assets.

Almost all (96%) of the pension fund executives believed that real estate could play an important role in de-risking DB plans "by offering high and consistent income while also matching obligation cashflows and enabling growth to assist reduce deficits."

Nearly one-fifth of managers seek a "substantial rise" in DB allocations, drawn by higher rates and the opportunity to accomplish goals via investing social real estate.

By fLEXI tEAM