Alternative Investment Seminar 2016
Our annual Alternative Investment breakfast seminar took place on Thursday 28 January at The Kings Fund in Cavendish Square, London. The Alternatives Board was joined by two guest panellists; Renos Booth from Aviva Investors and Zachary Vaughan from Brookfield Property Group.
Jon Neale, Head of UK Research, presented the findings of the annual JLL Alternative Investment survey. Jon confirmed that 2015 was a record breaking year for direct real estate investment into alternatives, with deal volumes over £15 billion representing 25% of all commercial real estate investment in the UK. This is a dramatic rise from five years ago where alternative investment accounted for less than 10%.
The main conclusions drawn from the seminar were:
The challenge for alternatives in 2016 will be to bring investment grade product to the market with limited operational risk, but which appeals to those who are seeking lower risk and return profiles. We will see more base and turnover leases, plus the emergence of low risk income strips, which could surpass the £1bn mark.
For institutional investors, pricing will remain strong and constant for prime product with long dated income streams.
2016 will see a focus on the development pipeline, with over a quarter of the investment (both private equity and institutional) into alternatives likely to be development based. This is still below the potential market demand from investors. Developers need to think about incorporating alternatives into mixed use development by using land more creatively.
The opportunity to inject capital expenditure into upgrading stock and thus improve operational performance should boost income growth. Investors will need to have the knowledge and advice as to how to choose the right product and managers in the market place if exposed to the operational / EBITDA cash flow.
2016 will see the more adventurous capital look to Europe as they view that some UK sectors are beginning to mature.
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Find out more about our past Alternative Investment seminars.