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Alternatives in 2017

The 5th JLL Alternatives Predictions event took place on Wednesday 25 January at The King’s Fund in Cavendish Square, London. 2016 was another excellent year for alternatives, with over £12.3 billion of transactions and total market share increasing to a record 29% of all commercial property investment.

James Kingdom, head of alternatives research at JLL, presented the findings of the annual survey as well as identifying the key themes that are likely to affect the alternative sectors this year, and unveiled JLL’s key predictions for alternatives in 2017.

To view the report click here.

The main conclusions drawn from the event were:

  • Our respondents who have over £207 billion of assets under management are planning to increase their exposure to alternatives by £14 billion over the next three years
  • 78% of investors expect total returns for alternatives to be higher than commercial property in 2017. JLL predict that total returns in alternatives will be 7% or higher
  • 56% expect yields to remain stable, with a further 25% expecting them to harden in alternatives this year. We expect yields to remain stable or harden with scope for further yield compression in the more established sectors
  • Self storage is the sector with the highest increase in allocations (35%)
  • PRS, Student Housing and Retirement living were the most popular sectors, accounting for 45% of all allocations. These sectors accounted for 75% of Private Equity allocations
  • Data Centres are becoming an integral component of investment strategies, with a quarter of all respondents choosing this sector, in particular institutional investors
  • The continued lack of supply in alternatives is both an opportunity and a barrier for investors looking to acquire assets at scale. While demand remains favorable, finding suitable operating partners can be challenging
  • In 2017 we expect to see £15 billion of investment in alternatives, as investors increase their understanding of the alternative sectors, while at the same time looking to protect themselves from economic uncertainty in the mainstream markets.

For more details please do get in touch with the team.

To read our press release from the event please click here.