Funds to raise exposure to UK property

An Aberdeen Asset Management survey of more than 100 schemes that hold real estate, seen exclusively by PW, revealed 36% say they are actively seeking to increase their investments in the asset class, compared with just 7% seeking to reduce it.

Of a further 50 schemes with no property exposure, 35% said they plan to move into the space.

But those funds cutting or maintaining their property portfolios warned illiquidity remained a major impediment.

Aberdeen group property chief Andrew Smith said: “Renewed interest in property as an asset class is not surprising, as investors are increasingly looking to diversify their equity and fixed income exposure.

“The recovery of the UK property market continues, with a strong demand for investment continuing to drive a rise in capital values.

“A pronounced lack of new development is also helping London office rental values to stabilise more quickly than in previous economic downturns.”

Smith added fund managers such as Aberdeen, which manages £5.4bn worth of property for UK pension schemes, “need to communicate with the industry to address investor concerns, particularly about liquidity and the perceived risks associated with property investment”.