Which UK real estate sectors offer opportunities to diversify?
There is currently US$1.5 trillion of new capital targeting global real estate from institutional investors, private equity and emerging new sources, which will boost demand for UK property assets as capital-rich investors chase yield.
As competition intensifies, investors are balancing their portfolios with properties across a range of sectors at varying levels of maturity. Understanding the full spectrum of UK real estate can help to ensure your portfolio includes the right sector mix.
Maturity categories key
Established – Largest sectors, easily accessible, consistently high levels of transactions
Mature – Size of sector determines liquidity and access, consistent or growing levels of transactions
Semi-mature – increasing supply and accessibility, narrow investor focus
Specialist – limited supply and liquidity, specialist investor focus
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The Established sectors such as offices, logistics, retail, residential, affordable and student housing stand to benefit most from this influx of capital in the coming years. They are the most accessible asset classes and continue to attract the largest proportion of investment dollars in the UK. Their appeal is supported by sound demographic fundamentals and long-term trends that impact how people work, live and shop in Britain’s major towns and cities.
Mature property sectors, however, are growing fast and becoming an increasingly important part of many investors’ portfolio mix, particularly build-to-rent, healthcare, care homes, flex space and serviced apartments, which are experiencing an increasing number of transactions.
Meanwhile, assets within the later living and automotive sectors – classed as the Semi-Mature sector – are increasingly accessible and abundant in supply, albeit among a narrower pool of investors.
Specialist investors will explore niche asset classes such as caravan and holiday parks, co-living, higher education, cemeteries and marinas. These properties are in limited supply and represent the least liquid corner of the UK real estate market.
Understanding the range of alternative asset classes that make up the UK real estate landscape can help you to diversify in the most appropriate places and guard your portfolio against future social and economic risks.
How are the established sectors performing?
Investors need to reposition, diversify and repurpose
What if real estate could deliver greater returns and reduce risk?
Investors need to reposition their strategies to suit a vastly changed world. They will raise, invest and restructure capital to prioritise long-term consumer trends over short-term profit.
Do you know which sectors and sub-sectors are growing fastest?
Investors need to look outside the traditional sectors for growth. Forward-thinking investors will deploy capital in new locations and sub-sectors.
How can you repurpose real estate in new ways?
Innovative investors will repurpose properties and portfolios with resilience, flexibility, technology, sustainability and impact investing at front of their mind to withstand future unknowns.