Investment in the UK’s alternative real estate sector is tipped to grow to £20bn (€25.5bn) by 2019.
Advisory firm JLL said annual investment volumes in the sector would almost double from their current levels of £11bn, based on a survey of investors’ five-year views.
The 82% surge is, the firm said, due to alternatives becoming more acceptable to institutional investors.
The higher returns relative to conventional real estate – as well as greater expertise in alternatives – will also drive investment volumes in the sector up.
Key targets for investors will be student housing, set to see a 70% increase in investment, as well as hotels and hospitality with a 69% increase.
Healthcare investment is set to rise by 66%.
The survey found that 90% of investors plan to increase their exposure to alternative real estate assets over the next five years.
Respondents are on average looking to increase their allocation to alternatives by 9% over the period.
Chris Ireland, UK chairman and lead director of capital markets at JLL, said alternative asset classes were becoming “increasingly attractive to institutional investors”, with a “particularly positive outlook forecast for the next five years”.
“As we move towards 2019 and beyond, with what indicates to be an ever-increasing investor appetite, it’s likely many of these assets will break out of the alternatives bracket and become a more mainstream choice for investors,” Ireland said.
By 2019, alternative investment volumes are projected to grow to 30% of all UK property transactions.
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