OUTLOOK NETHERLANDS Wall of capital nudges investors to alternatives

The struggle to deploy capital is not only prompting real estate investors to go up the risk but also to turn to alternative asset classes such as student housing, hotels and data centres, according to Henri Vuong, director of research and information at European non-listed funds body Inrev.

‘All these sectors are becoming really hot property,’ Vuong told PropertyEU's Outlook Netherlands Briefing in Amsterdam earlier this month.

In the Netherlands, student housing platform Class of 2020 has approached Inrev to create a student housing index as a way of benchmarking the sector’s performance. This, said Vuong, is a sign that ‘institutional investors are serious about staying in the sector’. The index tools are already in place and funds active in student accommodation have been approached to provide data on their performance.

Data centres are also gaining ground as societies across Europe move to a more online way of working, Vuong said. ‘All those data warehouses and cables have to be housed somewhere and those buildings are falling under the real estate tag as well.’

Meanwhile, healthcare property is taking many forms as some countries have more of a private hospital system rather than mainstream public facilities. Vuong: ‘More and more investors are looking at these sectors although finding stock might be something of a challenge. Certainly on the student housing side, the demand is for buildings in urban areas as students no longer want to live on campus.’

Vuong and fellow panelist Philip La Pierre, head of investment management Europe at Union Investment Real Estate, agreed that alternative asset classes – which typically enjoy strong investor attention during times of high capital inflows – should be treated with caution since they have a different operating model to traditional real estate classes. ‘You have to understand the operating model. It’s a completely different way of looking at real estate,’ Vuong insisted. But with more and more investors bringing in specialists to manage their hotel real estate, ‘some of the money will stay’, she said.