Investors in alternative real estate are attracted by the capital resilience and highly visible income returns which are often indexed linked, according to Daniel Bowden, Fund Manager at AXA Real Estate.
Investors in alternative real estate are attracted by the capital resilience and highly visible income returns which are often indexed linked, according to Daniel Bowden, Fund Manager at AXA Real Estate.
As reported by PropertyEU last week, AXA Real Estate has created a new business unit to manage and double the size of its alternative real estate assets it manages to over EUR 1.5 bn over the next three years. The new Alternative Real Estate Business Line which Bowden will head meets increasing investor demand for products targeting assets such as healthcare, student accommodation and more diverse assets such as police stations, he added.
‘Our "needs versus wants" investment strategy aims to achieve strong levels of income and capital growth outside of normal economic cycles as it is not predicated on wider macroeconomic growth to generate return. AXA Real Estate currently believes that alternative real estate has a real potential to grow as a product of institutional quality in Europe, following the US, where the combined alternatives REIT market capitalisation is three times larger than its US office REIT counterpart.’
AXA Real Estate has over a decade of experience of investing in and managing alternative real estate assets and aims to double its current portfolio of 78 assets under management in seven countries through new third party mandates and by launching a second pooled investment vehicle.
The returns available from this asset class stem from structural changes in demographics, regulations and government spending. For example, aged care, where occupational demand is driven by Europe’s aging population, or in student accommodation where a demographic bulge has led to increasing demand for university places, a demand which has been further enhanced by a weak youth employment market.
Bowden said further support to the strategy is derived from governments who, under growing financial pressures, are increasingly reliant upon the private real estate sector to provide for the social infrastructure needs of the population.
‘We are targeting a range of assets, including student housing and care homes and we will work with partners, such as developers, to grow our investment,’ Bowden said. At least half of the EUR 750 mln earmarked for investment will be placed in Germany, with additional investment planned in the UK and France.
