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‘Alternative’ property investment sees jump

UK_residential_propertyInvestments in ‘alternative real estate assets’ – such as care homes and hotels – has grown to a record 42% share of the overall UK commercial property investment market.

Investment in alternative real estate in the first quarter of the year grew by nearly 50% compared to the same period in 2018 as overall investment activity in the commercial property sector slowed.

The increase in the market share of alternative property assets – which include student accommodation and residential property - follows a growth of 29% and 35% in the two previous quarters, marking a steady rise in demand for assets of this class.

A total of £4.7 billion (€5.4 billion) was put into these alternative property assets, according to research from Cushman & Wakefield.

 “Investors are looking more broadly at the real estate market and while a flight to alternative assets is typically associated with late-cycle strategies, the strength of the interest is unprecedented,” said Jason Winfield, head of UK and Ireland capital markets at the firm.

“The growing understanding and maturity of alternatives as an asset class is proving to be a significant driver for change.”

Year-on-year trading, meanwhile, slowed down throughout the first three months of 2019. Over £11 billion of UK commercial real estate was traded during the first quarter, around 20% lower than the same period a year ago.

Lack of stock combined with “Brexit-related caution” saw activity in mainstream sectors such as office, retail and industrial weaken by 39%, the report found.

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