Research conducted online with 56 UK linked high net worth investors between May-June 2024 has found that nearly three in five plan to significantly increase their overall allocation to real estate in the next 12 months, but that any incoming government must tackle the residential housing sector to attract funding, according to specialist property lender ASK.

Some one in five (18%) of respondents plan to increase their current real estate investment risk tolerance, while 17% plan to decrease.

Key property sectors cited as likely to generate best returns over the next 12 months included: life sciences, warehouses & logistics and co-living. The appetite for retail sector investments was significantly lower, ASK notes.

Key challenges to investing in property over the coming period include: higher interest rates, changes in political leadership, increased regulation and changes to the tax system.

Around 13% of respondents said they felt housing should be the top priority for an incoming UK government. To boost investments in this area, this priority should include alleviating restrictions on conversions and brownfield sites, zoning and land use policies, and incentivisation for affordable housing. The current government has failed to deal with planning restrictions, the impact of affordability and the lack of a UK construction workforce according to respondents.

Daniel Austin, CEO and co-founder at ASK Partners, said: "Our research shows that investors plan to significantly boost their real estate investments in the next 12 months which is a really positive sign for capital investing in the sector and shows the strength of real estate debt as an asset class."

"The positive sentiment towards the life sciences, warehouses & logistics, and co-living sectors, is certainly a reflection on the investment prospects we are anticipating due to market demand. However, higher interest rates, political changes, increased regulation, and tax adjustments are seen as key challenges."

"To enhance investment, investors want to see the government focus on alleviating restrictions on conversions and brownfield sites, revising zoning and land use policies, and incentivising affordable housing. Addressing these issues could help overcome planning restrictions, affordability challenges, and the shortage of a construction workforce, thus strengthening the UK's real estate market."

"Housing is a pivotal election issue, linked to economic stability. Rising house prices and mortgage approvals suggest the beginnings of a recovery, but the housing shortage threatens a full turnaround. The UK faces an affordability crisis due to insufficient rental and sale properties, impacting GDP. Decades of social strain persist unresolved. Parties must present credible long-term plans, aiming for 300,000 homes annually, a target unmet since 2004. Reviving SME housebuilders, boosting skilled labour, and reforming planning are crucial."