Real estate is often said to be a people business. But it really is. People – workers, customers and dwellers – are the fundamental source of demand for real estate, without which it has little value. This is why major demographic shifts have come into keen focus for property investors.

But the picture is complicated. For instance, it is common knowledge that Europe is ageing, but while you might expect this to lead to a widespread weakening of demand, another trend – urbanisation – is skewing the effect. People are moving to cities, ensuring demand is buoyant.

Asia-Pacific is also ageing, finally calling time on a period when its population was dominated by working-age people. This means real estate investors should consider increasing their exposure to residential assets in their various forms, including healthcare and retirement homes.

Meanwhile, the Millennial generation is transforming US real estate markets, from offices to housing. Life sciences and biotechnology companies – which are helping people live longer and serving them in their longevity – are snapping up more and more specialist commercial space, creating opportunities for investors.

But the biggest opportunity, certainly in the long term, is undoubtedly Africa. Here the demographic outlook is strong: the world’s population is expected grow by 2.2bn between now and 2050, and more than half of that growth is expected in Africa. Jos Tromp, head of research for EMEA at CBRE, says in our coverage of demographic trends, “Africa, theoretically, is the biggest real estate opportunity.”

While investors look at housing to capitalise on demographic and urbanisation trends, there is another shift that could also encourage greater investment in residential markets. Emerging interest in impact investing could well prove instrumental in bringing more institutional capital into affordable and social housing markets.

“There is clear opportunity for positive social impact through real estate investment,” says Simon Chisholm, investment director at Resonance. “The need for both residential and commercial property to scale up social enterprise models is huge and still largely unmet,” he says.

Cheyne Capital and Bridges Fund Management are two other companies running affordable housing funds in the UK. But IPE Real Assets understands that another global asset manager is looking to launch a pan-European offering, suggesting growing appetite for the sector.

Chisholm is hopeful that Resonance can attract capital from local authority pension schemes in the UK. These investors have certainly become more active in UK housing recently.

Towards the end of 2017 five local government pension schemes (LGPS) committed an aggregate £100m to Hearthstone’s debut closed-ended, institutional housing fund. At the time, Philip Atkins, chair of the Staffordshire Pensions Panel and leader of Staffordshire County Council, said: “This is an opportunity for funds to make an investment that firstly meets our investment requirements, but also contributes in a small way to the housing need of the country.”

But the LGPS is in the middle of a massive consolidation project, which will lead to the 89 funds in England and Wales being combined into eight pools. The endeavour has implications for real estate and infrastructure investments.

These illiquid asset classes pose some of the biggest challenges to the pooling project, bringing together illiquid, heterogeneous and disparate portfolios. In the latest edition, we explore how far the LGPS have come in the process.

The exercise is not without precedent. Dutch pension funds have undergone waves of consolidation in recent years, and today the organisations that oversee the investment of Dutch retirement capital – such as APG and PGGM – are some of the biggest institutional allocators to real estate and infrastructure in the world.

Peter Hobbs, managing director for private markets at Bfinance, says over time the pools will aim to join the ranks of the larger, more-direct global investors. “It will take a long time for them to become like an APG, but that is the direction [in which] they are going,” he says.