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News Release


Four out of five investors to increase exposure to alternative real estate investments

Says Jones Lang LaSalle’s latest industry research

London, 26 September 2013 – The market for alternative property assets in areas such as healthcare and education is set to grow rapidly over the next decade, outpacing activity in conventional commercial property.
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A Jones Lang LaSalle survey of fund managers and investors revealed that four out of five investors plan to increase investments in these sectors.
Currently 63% of the respondents, who were drawn from a wide variety of institutions, funds and private companies, have weightings to alternatives of 10% or less. But by 2023, 79% expect weightings to have risen to 15% or more – with over a third (38%) predicting 25% or more.

Student accommodation is set to see the biggest boost, with 70% of respondents keen to increase exposure, followed by private rented housing (65%) and hotels (64%).

Many respondents intend to disinvest from commercial real estate to some extent due to competition and decreasing supply.

Jon Neale, head of research UK at Jones Lang LaSalle said: “The competition for commercial real estate combined with shortening lease lengths is forcing funds to look further afield for yield and longer-term income.

Investors are also concerned about structural change in the retail and offices sectors, as well as the need to find inflation-linked product to match their requirements.

“Smaller, more opportunistic operators also recognise the potential for capital and rental growth – and the sheer weight of additional demand – driven by demographic shifts in sectors such as residential and healthcare.”

Chris Ireland, UK chairman and lead director of Capital Markets at Jones Lang LaSalle said: “The sentiments of the investors we interviewed demonstrate that investment in alternatives will increase substantially over the next 10 years.

“Judging by the results of our survey, when we hold our annual alternative investment seminar in five years’ time alternatives will be an established part of the real estate market.”