Real Estate

Investing in real estate

Real estate is the largest and most crucial asset class for individual and institutional investors around the world, with the primary residence being the single largest asset for many investors. International real estate assets are worth more than the combined total of global equities and debt securities, and more than three times the world’s GDP.

Rising inflation rates and low-interest rates are driving investors to explore alternative forms of investment that protects their capital and generates returns above the inflation rate. Real estate investments continue to attract investors due to their steady yields and capital appreciation while allowing them to diversify their multi-asset class portfolio with a lower correlation to equities.

REAL ESTATE DEFINED

For investors, the continuing challenge is to discover attractive assets to invest money in this competitive environment. However, several exciting new alternative real estate sectors have emerged in recent years, offering steady and predictable cash flows to investors.

In some of these sectors, returns offer the added advantage of being counter-cyclical and less correlated to core real estate returns. These characteristics mean that adding them offers real diversification benefits from a portfolio construction perspective for large investors.

ALTERNATIVE REAL ESTATE

Below are three of the hottest alternative real estate asset classes which are gaining attention from institutional investors worldwide.

Co-working space

Data centres

Student accommodation

There is growing demand for alternative real estate assets. Yet they still comprise less than 10 per cent of the overall real estate market,

This direction is driven by shifting demographic trends (student accommodation, care homes), changes in consumer needs (self-storage, cold storage, data centres, co-working offices). These developments re-affirm the expectation that these alternative real estate sectors are predicted to grow over the forthcoming years.

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