Wealthy investors are piling into real estate. A new report by property lender ASK Partners shows that a massive 58% of high-net-worth (HNW) investors are planning to dramatically increase their real estate investments in the next year. That’s a huge amount of money flooding into the market.

Where’s the money going?

The report shows that HNW investors are most excited about these sectors:

• Life sciences: Demand for lab space and research facilities is booming, making this a hot area for investment.
• Warehouses and logistics: Online shopping is here to stay, driving a need for more warehouse space to store and ship goods.
• Co-living: With rising living costs, more people are choosing to share living spaces, leading to increased demand for co-living developments.

But it’s not all sunshine and roses.

These investors are also facing some challenges:

• Higher interest rates: As the Bank of England raises rates, borrowing money becomes more expensive, making development projects less profitable.
• Political uncertainty: With a new government on the horizon, investors are nervous about potential changes to regulations and tax policies.
• Increased regulation: The government is constantly introducing new rules and regulations, adding to the complexity and cost of development projects.
• Tax changes: Changes to tax rules can impact the profitability of real estate investments.

What do investors want from the government?

HNW investors want the government to make it easier to build:

• Loosening restrictions on conversions and brownfield sites: This would unlock new development opportunities, increasing supply and affordability.
• Revising zoning and land use policies: Outdated regulations can make it difficult to build new homes, so updating these policies is crucial.
• Incentivising affordable housing: This could help address the UK’s housing affordability crisis and make it easier for people to find a place to live.

The bigger picture

The report also highlights the importance of housing to the UK economy. A whopping 13% of HNW investors believe that housing should be the top priority for the new government. This is because the housing shortage is a major problem, impacting affordability, economic growth, and social stability.

Daniel Austin, CEO and co-founder of ASK Partners, says: “Investors are looking for ways to put their money into a secure asset class, and real estate is proving to be a very attractive option. However, we need to see the government take action to make it easier to build more homes, otherwise the housing crisis will continue to worsen.”

The bottom line: This report is a clear signal that the UK’s property market is still a hot investment opportunity, but it’s facing challenges that need to be addressed.