Investors focused on ESG, cautious on expansion: Patrizia

Institutional investors are currently more cautious according to the third annual Patrizia Client Survey with 28% planning to decrease the real estate allocations in their portfolio and 55% planning to keep their portfolios unchanged.

This is in stark contrast to the previous survey which found that 60% of investors intended to increase their portfolios over the next five years.

The latest survey also found investors more focused on value creation  through active asset management and the survey identified a particular focus on decarbonisation initiatives, ESG data collection and value-add strategies over the next five years.

Furthermore, 85% of investors believe that brown-to-green development will increase over the next 12 months, with a quarter expecting a significant increase. Two thirds of investors expect an increase in capital expenditure and refurbishment programmes.

ESG continues to gain in importance as a decision-making factor, with 70% of respondents indicating that ESG criteria are an important part of their investment process. Around 82% will track the energy of their real estate investments over the next give years, with 46% measuring Scope 3 CO2 emissions along their value chain, a 40% increase from the previous year.

CEO of European real estate at Patrizia Philipp Schaper commented: “Our survey clearly shows the impact that rising interest rates and economic uncertainty are having on investor sentiment. However, more importantly it also underlines our conviction for driving the long-term value of real estate through an active asset management strategy supported by a data-led approach.”