Investec is aiming to double its commercial property investment in the UK, in order to take advantage of the estate sector recovery, according to The Times.
Even though the firm has seen it's share price drop by 1.6 per cent this morning (June 10th), the overall price has gained 4.56 per cent in the past 12 months, meaning that it can double its British portfolio. By moving smaller clients into a holding, an extra £500 million of the company's most wealthiest firms will be invested into further UK property firms and funds. This is primarily because the sector has proved to be low on its volatility, but does offer future growth for buyers.
According to The Times, the group’s chief investment officer Chris Hills said: “This is the first move to materially increase our allocation to property in five years [since the property market crashed], so yes I suppose we are calling the market.”
The company already has £40 billion of assets under its arm, £22 billion of which is invested in UK clients, whilst the Wealth arm has 2.5 per cent of its portfolio invested in British commercial property. The Asset Allocation Committee within Investec did decide last week however that this figure would be raised to 5.5 per cent, meaning that £1 billion of Investec's clients' money would be tied into real estate.
Investec has already announced that whilst many investors are keeping their gaze on the capital city, the firm hopes to look further afield regionally. Even though yields remain high in London, other large cities are proving popular. Mr Hills stated if they invested in Birmingham or Manchester at a seven per cent yield and then capital values went up, then this would build up “a nice total return.”
The company will surely be waiting until the second quarterly figures to make further decisions on investment.