There has been a growing focus from institutional investors on social benefits when investing in real estate, according to research by Alpha Real Capital.
The secure income real asset manager's research - which questioned 55 professional investors across Europe - revealed 80% of European professional investors now have social real estate "firmly on their radar" as an investment opportunity.
The research also found 93% took social benefits and impacts into consideration when assessing real estate investments, while 96% now regard the presence of social benefits as important to their investment decision-making process.
Additionally, Alpha expects around 30% of pension funds and other institutional investors over the next two years to increase their real estate allocation to funds offering a social benefit.
When assessing the ESG characteristics of real estate products, Alpha's research revealed 96% of investors questioned said it was ‘very' or ‘somewhat' important to be able to track the benefits derived from the underlying investments of any social real estate fund.
Alpha's research clearly demonstrates there is a growing trend across all investors - institutional and retail - to actively look for investments that have a positive social benefit and we see this trend accelerating.
Head of social real estate Adrian D'Enrico said: "Alpha's research clearly demonstrates there is a growing trend across all investors - institutional and retail - to actively look for investments that have a positive social benefit and we see this trend accelerating.
"There is a very strong, multi-factor investment opportunity emerging in social real estate. A growing and ageing population will need access to more assets and services provided in social real estate, but the sector faces significant challenges around insufficient and inadequate stock.
"Any response from the public sector will be hampered by strained government finances at a central and local level, which have been put under increased pressure with the immediate costs of dealing with the Covid-19 pandemic. This reinforces the opportunity for private capital to assist in funding and delivering assets - an opportunity we estimate would be well over £50bn."
D'Enrico continued: "There is little doubt that pension funds and other institutional investors are increasing their exposure to real estate investments offering clear and measurable social benefits. Furthermore, our research suggests that the current coronavirus crisis may speed up this trend."
Alpha chief executive Phillip Rose added: "Investing in social real estate is one route for investors to make a positive impact on society while at the same time achieving predictable cash-flows over long periods of time with significant component of returns linked to inflation."
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