On the go: More than half of scheme professionals believe institutional investors are planning to increase their allocations to real estate vehicles that provide social benefits over the next two years, according to new research.
Real assets manager Alpha Real Capital, which polled 100 UK-based professional pension scheme investors who jointly manage £143.6bn, revealed that 58 per cent of respondents believe in a rise of investments in socially responsible real estate assets.
On the other hand, only 5 per cent think allocations will decrease, while 37 per cent assume no change will occur.
Almost four-fifths (79 per cent) of those interviewed identified the importance of social benefits when it comes to evaluating real estate investment allocations, while 40 per cent categorised social benefits as the most important factor when deciding on the environmental, social and governance component of real estate investments.
However, 47 per cent identified social benefits as the second-most important factor to assess after ESG concerns.
The Covid-19 pandemic has been a key catalyst in the increase in social real estate investing, with two-thirds (66 per cent) of UK pension scheme investors surveyed saying it has increased the importance of this aspect in their decision-making process.
Adrian D’Enrico, head of social real estate at Alpha Real Capital, said: “The pandemic has highlighted the diversification benefits of social real estate, with underlying revenues proving to be resilient compared with the mainstream commercial real estate sectors.
“This is a view that 91 per cent of pension schemes we interviewed said they agreed with, and four out of 10 said they ‘strongly’ agreed with.
“The key reason for the sector’s robust performance during the crisis is the essential nature of both the accommodation provided and the services delivered from the assets. In addition, rents are often underpinned by public sector funding, and there is a strong structural supply and demand imbalance,” D’Enrico continued.
“We estimate that the UK social real estate sector needs at least £50bn of new funding to address a huge shortfall in modern, efficient, purpose‐built housing, education and healthcare stock.”
