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Broader Horizons - the Attraction of Alternative Real Estate

Greg Mansell • 11/07/2019

Investors - keen to increase yields and deliver portfolio returns - are focusing on a broader range of property investment types. 

Investing in the UK property market beyond the three main sectors - offices, retail and industrial – means diversifying into hotels, student living, residential, healthcare, data centres, self-storage and car parks. 

In 2018 28% (£17bn) of all commercial real estate investment in the UK was in alternatives - the highest level on record. 

Over the last decade (2009-2018) we’ve seen the attractiveness of alternatives grow to deliver impressive performance.
View the key highlights:

 

Drivers to Alternatives

Institutional investors are seeking sustained income streams. The combination of decreasing lease lengths and fierce competition for prime assets in mainstream sectors has made low-yielding alternatives look competitive, particularly over the long term.

Alternatives Investment Strategy 

Alternative property types are distinct specialist sectors that have varied demand drivers and investment traits, so investors should avoid a combined investment allocation.

Portfolio acquisitions are the most common way to access the best assets and strongest covenants. Investors are acquiring, or partnering with, dominant operators to quickly gain specialist knowledge and economies of scale. 

"Investors are seeking better yields and are increasingly prepared to consider a wider range of property types, different financing options and adjusted risk returns to achieve their goals.” David Haynes, UK Capital Markets.

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