Residential real estate has been touted as the top-performing asset class over the next two years, according to a survey of investors.

Investors across the UK, Europe and North America have been surveyed to find out where they consider the highest risks and the biggest opportunities to be over the coming years. The research looked at 108 senior-level investors and was carried out by Auxadi.

The findings revealed that residential property was still the most promising asset class, with more than two thirds (69%) saying they expect it to post the strongest gains over the next two years.

This compares with 56% who are backing central business district located offices, and 49% who are optimistic about food-anchored retail parks.

A major reason behind this is that, during uncertain times, investors tend to shift towards sectors with more predictable cashflows. As such, the investors surveyed also expect to see an increase in distressed assets coming to the market, with a 15% rise on last year.

The report points out that the growing positivity towards investing in property stems from continued supply shortages, higher incomes, and for-sale affordability challenges.

‘A shortage of suitable housing stock is expected to not only drive institutional investment strategies in major cities but also lead to growth in secondary cities as a flight to affordability takes place,’ said the report.