EXPO REAL 2016: M&G Real Estate is anticipating record inflows to its funds in the final quarter of 2016.
The demand for M&G’s funds is part of a broader desire among investors to take advantage of the relatively high yields on offer from real estate compared to bonds and gilts.
Tony Brown, chief investment officer at M&G Real Estate, said: “With the low interest rates we have, global real estate is still seen as an attractive proposition. The desire for yield and for strong cash flows is almost insatiable across markets across the world. Our biggest headache is investing capital as it is so competitive.
“Probably this quarter coming up – Q4 – could even be a record quarter for us in terms of capital raising globally as a business, which I guess is an indictment of pretty strong flows generally for real estate around the world.”
UK institutions have generally been less active domestically since the EU referendum as a result of a wave of closures for redemptions for flagship UK funds. This included M&G’s own £4bn vehicle, although the manager has indicated that it could reopen this month.
Brown said that he expected UK institutions to return to the market in force before the end of the year.
“I think in the final quarter there will be some large deals by UK institutions coming back in, seeing where property capital values have dropped by 3-5% and that there is an opportunity to start buying again.”
M&G is targeting further growth of its build-to-rent business in the UK, its long-leasehold portfolio in the UK and Europe, logistics in northern Europe, Japanese logistics and residential.
• To send feedback, e-mail david.hatcher@estatesgazette.com or tweet @hatcherdavid or @estatesgazette
