Written by the Economist Intelligence Unit and commissioned by Barclays Wealth, this tenth volume of Barclays Wealth Insights looks at investor perceptions of the global real estate market.

Wealthy investors expect to increase their asset allocation to real estate. Over the next two years, 35 percent of respondents plan to increase the proportion of real estate in their portfolios (not including their primary residence), while 48 percent plan to maintain their current allocations. The main reason that investors give for the increase is that they believe real estate offers better long-term prospects than other asset classes. Investors from the Gulf Cooperation Council (GCC) states and Canada are most likely to increase their allocations — by an average of 4 percentage points — while Spanish investors are the only respondents who expect their average allocation to real estate to fall.

Some investors may already have extremely high exposure to real estate. Almost six out of ten investors from Spain, and just under 30 percent of those from the U.K. and India, say that 50 percent or more of their portfolios are in real estate. Allocation also tends to increase with wealth: Among those respondents with $48m (£30m) or more in assets, almost 40 percent say that they have allocated more than half their portfolio to real estate.

Investors can see opportunities in the real estate market, but the scarcity of credit is constraining their options. Following a prolonged downturn in real estate markets around the world, high net worth investors are once again eyeing opportunities in the sector. Three out of four wealthy investors say that residential real estate is looking attractive, but 60 percent of them say that tight credit conditions are preventing them from taking the plunge. Respondents are slightly less sanguine about opportunities in commercial real estate, with 68 percent saying that they are keen to explore opportunities, but 73 percent of them feel hampered by the high cost of borrowing.

There is growing confidence about the medium-term outlook for real estate, but prices may have further to fall in the near future. Although they recognize that current market conditions are throwing up significant investment opportunities, high net worth investors give a cautious assessment of the prospects for their own real estate portfolio. Just under half expect an increase in the overall value of their real estate investments over the next two years, while 29 percent expect no change and 23 percent expect a decrease. Investors from India, Canada and Singapore are most bullish about the future, while those from Spain are least optimistic. More broadly, there are doubts about the incipient recovery in real estate prices. Across the ten focus markets, fewer than half of respondents believe that prices have reached their lowest point in their own markets.

A significantly greater proportion of women than men are keen on investing in real estate. When it comes to real estate, the survey reveals a striking variation in the attitudes of the two sexes. Nearly half the women surveyed say real estate is a less risky investment than stocks, whereas only 37 percent of men agree with that view. Similarly, while 44 percent of women find buying real estate more enjoyable than investing in other asset classes, just 28 percent of men feel the same way. Women also tend to favor investing directly in bricks and mortar more than men. While 34 percent of men are likely to invest in real estate indirectly through a fund, only 14 percent of women would prefer to go down that route.

Outside their own countries of residence, most investors consider the U.S. to be the most attractive real estate market. The U.S. tops the list by some margin, while the U.K. ranks joint second. In both markets, there have been precipitous price declines, so investors may be reasoning that there are bargains to be had. However, there is also considerable interest in emerging investment destinations, such as China and India, which are second and fourth on the list respectively. The appeal of these countries is likely due to a belief that rapid economic growth and rising wealth will fuel demand for real estate and lead to capital gains and attractive yields over the long term.

Investors may be somewhat emotional in their approach to managing real estate investments compared with other asset classes. An emotional attachment to bricks and mortar — often stemming from the central role that homes play in people’s lives, but also due to factors like prestige and location — can mean that high net worth investors are often unwilling to sell real estate at short notice and, therefore, they may be less rigorous in measuring its performance as an asset class. Investors also may not be taking advantage of the diversification possibilities within real estate as an asset class. For example, just 29 percent hold indirect real estate investments, such as mutual funds and real estate investment trusts, when these can offer a relatively liquid way to gain exposure to real estate across a wide range of sub-sectors and markets.