Savills research finds investors in search of higher returns

Savills' new survey finds that investors are re-strategising their investments with increased numbers targeting Opportunistic strategies.

Savills Investor Survey 2024 Results | BTR News
Image credit: Savills.

Property consultancy Savills has released the results from its European Living – Investor Sentiment Survey 2024.

Savills has found through the results, that there has been a marked shift in the strategies investors are pursuing in the living sectors. This is most clearly seen in the increased proportion of investors targeting opportunistic strategies, which has risen from 10% in 2023 to 25% in 2024. The increase follows the recent challenges that investors have faced over the past year, including the heightened cost of debt.

Meanwhile, there has been a fall in the proportion of investors who are targeting Core-Plus strategies, down from 38% in 2023 to 18%. The higher weighting to Value Add and Opportunistic strategies is reflected in the upward shift in return expectations for stabilised multifamily assets in 2024.

In 2023, three-fifths of investors were expecting between 4–8% per annum unlevered total return for standing, income-producing investments. However, in 2024 most investors (63%) now expect to see unlevered annual returns of 8% plus over the next three to five years – with close to two-fifths expecting over 10%.

There is, however, a divergence in the strategies being pursued by investors in continental Europe compared with their UK counterparts. Amongst the former, almost a third of investors are targeting Core strategies, double the proportion of UK investors (16%). The opposite is the case for Core-Plus strategies, with a very small number of European respondents (5%) selecting this option, compared with a large proportion of UK investors (28%), Savills found.

Mirroring the higher proportion of European investors looking for Core strategies, Savills found that there is a higher proportion who are expecting slightly lower unlevered total returns in the Multifamily sector compared with UK investors. Two-thirds of the former expect between 6%-10%pa, compared with only 39% of the latter. Nearly half (48%) of UK investors expect more than 10%pa returns, whilst only around a quarter (27%) of European investors do.