Alternative asset classes go mainstream

Real estate 360

Alternative asset classes have come of age. In recent years, the private rented sector (PRS), healthcare projects and the industrial sector have moved up the agenda to become mainstream investment vehicles. Today, they are critical growth levers for UK real estate.

Changing consumer and occupier habits have led these trends. Inflated property prices have locked a sizeable population out of homeownership and forced social attitudes to evolve. Soaring demand for high-quality rented accommodation has led to a boom in PRS.

Official statistics show there were 4.5 million households in the PRS sector in 2015/16, up from 2 million in 2000. PRS is now the second largest tenure in England, accounting for 20 per cent of households. Growth prospects look bright - PRS is set to be the top area for investment activity in the year ahead.

The industrial sector has also experienced an upswing in investment activity and interest in a different type of warehousing. The growth in online shopping means traditional businesses now need warehouses in well-connected locations across the UK. As retailers continue to shrink delivery times to offer same day delivery, the demand for industrial units shows no signs of slowing down.

How landlords, occupiers and developers harness technology and understand customer data, will also change the look and feel of the UK high street. As consumer demand grows for novel experience-led formats, could we soon see online-only businesses infiltrate the high street?

Download the full Real Estate 360 report.