Secondary property as an asset class is attracting more attention as a potential investment opportunity, according to a report published by the National Association of Pension Funds.
This is the latest in the series of Investment Insight reports and looks at the relatively neglected secondary property market – which can be defined as UK commercial property not deemed to be top end prime property – and looks at why pension funds might consider investing in it. It considers valuations, the asset characteristics and what trustees should consider before investing in this asset class.
Helen Roberts, Policy Lead: Investment, NAPF, said: “The flight to safety in recent years has led to substantial investment in UK high quality prime real estate assets, principally in London. Investors have, up to now, eschewed lower quality secondary properties but the tide is now turning with potential opportunities opening up for pension schemes to invest.
“The reasons for looking at secondary property now include the historically large gap in yields between prime property and secondary property, an increased appetite for more illiquid assets against a backdrop of an improving economy and the forced selling, primarily by banks, currently seen in the market.”
The NAPF’s Investment Insight series is designed to provide information on new assets, strategies and regulation that impact pension schemes’ investment choices. Themes are chosen in conjunction with our members and are aimed to help members with their investment decisions.
The Investment Insight: Secondary property – potential investment opportunity? report is available on the NAPF website here.
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