The average high net worth investor is retaining significant allocations to real estate but lowering their risk profile, according to a recent survey carried out by real estate funding specialist ASK Partners.
In a survey of 83 high net worth real estate investors, 35% have lowered their risk profile as a result of the current economic environment, with 20% now holding more in cash and 60% citing a preference to invest in lower risk first charge loan structures.
Respondents’ key economic concern was rising interest rates, however demonstrating property’s resilience as an asset class, 32% have not made changes to the amount they have invested in UK real estate in the last year and on average these investors surveyed are looking to increase their allocation by 14% in the next 12 months.
Property was also the highest allocation of individuals’ portfolios, excluding their private residence, at 46% of total assets, followed by 26% cash, 25% equities, 22% venture capital and private equity and 15% alternatives.
Residential, including build-to-rent (BTR) and student, were the most popular asset classes and London the most preferred location for investments.
Daniel Austin (pictured), CEO and co-founder at ASK, said: “These are sophisticated investors who invest in ASK loans through our online platform, and it is very positive that they are retaining a strong appetite for real estate despite the current economic climate, reflecting the solid fundamentals and long-term trends of the asset class.
“With interest rates now at 5% we expected to see investors lower their risk profile.
“Our self-select, online model allows investors to remain nimble in volatile times with the flexibility to increase their allocation to cash, select lower risk/return loan structures and their preferred asset class and location to suit their changing profile, putting them in a strong position to achieve risk-adjusted investment returns in a difficult market.
“I expect best in class wealth-tech platforms to become a dominant choice for sophisticated investors looking to react to the fluctuating economic environment.”
