The opportunities provided by real estate investment

With inflation remaining persistently high and the tough macroeconomic environment looking set to continue into the near future, many investment professionals are considering how they can still deliver positive and, ideally, inflation beating returns for their clients.

At a breakfast roundtable hosted by PAM Insight and supported by real estate stock exchange IPSX, attendees discussed whether alternative investments could provide this opportunity for professional investors and their clients.

Rupert Snuggs, head of origination at IPSX, believes there are opportunities to be grasped in real estate. Some attendees noted clients can be wary of real estate investing largely due to having negative experiences during the Global Financial Crisis in 2008.

During this period, real estate investment trusts (REITs) lost on average 37.3 percent of their value, while hotels, shopping malls and industrial focused REITs lost around 60 percent. Many panicked and sold their assets, leading to liquidity issues as well. However, those that did not sell saw their investments regain their previous value and continue to grow. Despite fears among certain clients, the attendees agreed the current environment is very different to 2008.

Unless clients are over exposed to real estate, which can often be the case with clients for whom their residences form a large part of their portfolio, the attendees agreed there is a space for real estate in investment portfolios.

Mr Snuggs suggested there are more opportunities in this asset class than perhaps the wealth management industry realises. Explaining, he said: “A vast level of capital is required to upgrade buildings in the UK in line with new EPC rulings coming into effect in 2030. And it feels people are not recognising this.” Significant capital will be needed to fund this transition and many property owners are currently concerned about how they will fund this.

Mr Snuggs believes, as a stock exchange, IPSX can offer an answer to this challenge. “IPSX provides the infrastructure to match an untapped pool of capital to help fill this liquidity gap.” Its offering is new to the wealth management community. The firm describes itself as “the world’s first real estate stock exchange”.

Mr Snuggs explained: “IPSX is a hugely important development in the modernisation of the real estate capital markets providing a liquid market for real assets, with dividend and cost transparency. Either as a direct or SIPP investment and available to all market participants. “IPSX is an established and timely solution for issuers and investors. For issuers, who want to admit assets, IPSX provides a more flexible way to raise capital from new sources, and in so doing it provides direct access to professionally managed real estate investments for both institutions and private investors alike.”