Investment in alternative real estate assets hits record high

With savers continuing to receive poor returns from banks and building societies, many people unsurprisingly continue to turn to residential property as a means of supplementing their income, supported by record-low mortgage borrowing rates, solid demand from tenants and stable yields, as buy-to-let consolidates itself as the investment of choice. But there are signs that more people are also now diversifying their investments in alternative real estate assets.

Having a diversified portfolio is increasingly seen by some financial planners as a prerequisite to responsible investing, and that may partly explain why alternative real estate assets, such as hotels, residential and care homes, reached a record 42% share of the overall UK market in Q1 2019, according to new research from Cushman & Wakefield.

Nigel Almond, head of data analytics – EMEA Research at Cushman & Wakefield, said: “Overall we have seen £4.7bn invested in UK alternative assets during Q1, taking their overall share of the market to 42%.

“This is its highest share on record and follows a 29% and 35% share growth in each of the previous two quarters and underscores the continued demand for assets in these sectors.”

As well as being the highest quarterly proportion of overall investment on record, the £4.7bn invested in alternative assets represents a 47% increase on the first quarter of 2018.

In fact, it represents the fourth-highest quarterly volume recorded and follows the continued upward trend in investment in this sector.

Jason Winfield, head of UK & Ireland Capital Markets at Cushman & Wakefield, said: “Investors are looking more broadly at the real estate market and while a flight to alternative assets is typically associated with late cycle strategies, the strength of the interest is unprecedented.

“The growing understanding and maturity of alternatives as an asset class is proving to be a significant driver for change.”