Assetz Capital, the largest peer-to-peer investment platform in the UK and a major provider of alternative funding sources to SMEs and property developers, has released new data analysing retail investor trends in the UK real estate market.
The data indicates that investors are seeking out opportunities to make their money work harder as relatively low interest rates, combined with rising living costs, means saving continues to be unattractive.
54% of Assetz Capital’s investors are looking to increase the size of their overall investment portfolio next year, while 33% planning to stay at the same level.
Some 67% of Assetz investors highlighted the main reason for investment was that it offers the potential for a better return than savings considering in the current climate.
At the same time, 16 % specifically highlighted that the primary reason for investing was to provide alternative ways fund their retirement, perhaps suggesting that many investors are nervous about the economic outlook and are looking for new ways to secure their retirement income.
The new poll was extremely revealing in terms of the shift away from traditional real estate investing, towards more innovative, alternative finance options.
70% of Assetz Capital’s investors said they don’t invest in bricks and mortar, while 91% of those respondents said they haven’t held a bricks and mortar investment for the last five years. This is a clear indication that bricks and mortar and buy to let’s role as the primary method for investing in real estate has long since passed.
Contrary to the decline of buy-to-let, the data reveals that investors remain committed to alternative real estate investments with 52% sticking with their current investment levels for the year ahead, while a sizeable number, 31% will be looking to increase their portfolios over the next 12 months.
Alternative real estate opportunities include peer-to-peer secured lending, crowdfunding and fractional property investment.
It does not include traditional real estate investment opportunities like directly held buy-to-let bricks and mortar properties, or real estate investments on the stock exchange, or through REITS or other funds.
Asked why they are planning on increasing their levels of investment in alternative real estate opportunities, Assetz investors revealed the top two reasons were that they were looking for greater returns on money currently in savings (56%) and to diversify their investment portfolios (31%).
Assetz investors cited the top three challenges in owning and investing in bricks and mortar as the hassle and time required to manage the properties (43%), the costs associated with maintenance and refurbishment (38%) and increasing costs due to government regulation (35%).
In line with a sharpened focus on social impact and sustainability investing in the real estate sector, the data revealed 59% of Assetz investors placed increasing importance on social environmental impacts of their alternative real estate investments.
Stuart Law (pictured), CEO of the Assetz Group, said: “Buy-to-let is dead, long live buy-to-let! In fact, it appears that buy-to-let died some time ago and we are truly in a new age defined by more modern, flexible and hassle-free methods of real estate investing. We’re excited to be at the forefront of this movement.
“As it stands, the current financial system is broken. Savers may struggle to get a fair return on their deposits, while businesses can’t get the funding they need to grow.
“At the same time, there aren’t enough homes in the right places at the right prices. In line with investor appetite for more alternative real estate opportunities and a more convenient, hassle-free way to invest, our focus is on continuing to innovate.
“As a group, we are providing tech-driven platforms to allow private investors to support funding or ownership of higher yielding real estate schemes.
“This provides total flexibility to directly choose and manage a diverse portfolio of property backed investments, with far less stress than a typical and directly held buy-to-let property.
“At the same time, our focus on underfunded sectors of the real estate market and wider economy allows our investors to see significant social impacts from their commitments, whether delivering much needed new homes or creating more jobs, this is something we know is growing in importance for all those who utilise our platforms.
“We think this is the future for real estate investing, meeting the needs of the modern investor, while providing more bespoke finance solutions for essential, yet underfunded market sectors.”
