Student Housing, Private Rented Sector (PRS) & Healthcare are to be some of the new investment drivers in 2018 says JLL at its annual property predictions event, as the Alternatives market gets set for stellar year.
James Kingdom head of Alternatives research at JLL addressed a packed house of key investors in the Midlands region as he spoke about the dramatic rise of the Alternatives market.
“For investors, major technological and social changes combined with rapid urbanisation is bringing new opportunities. Transaction volumes in Alternative assets have risen from 10 per cent of the overall commercial property market in 2010 to 26 per cent in 2017, to make it the most successful year to date.
“In 2018 we’re expecting the Alternatives market to outperform mainstream commercial property as investor demand looks set to increase amid economic uncertainty and weaker prospects for commercial sectors.”
Matthew Smith, lead director for the Nottingham office of JLL added: “More and more in the East Midlands we are working with the JLL’s Alternatives team on transactions, with JLL having transacted 32% of Alternative deals in 2017, a sector today accounting for £15.7 billion.
“Certainly we’ve already seen a big rise in student housing in Nottingham. An aging population too is resulting in much greater need for assisted living facilities. Population growth and increased longevity means there is need for a greater variety of housing types, leading to the emergence of a specialised build-to-rent sector.
“Technology too is changing the way we live and work and data centres are also a growing asset class. Demand is driven by business and and the rapid growth of wifi enabled devices.”
James Kingdom stated that there is a growing need for data infrastructure in regional cities to attract new tech and creative companies and maintain competitiveness. .
Jon Neale head of research at JLL added that he was absolutely sure technology was changing the world and that the logistics of changing consumer habits would need to be addressed in the region.
“If you look at the rise of small goods vehicles since 2000, they have increased by 50 per cent, significantly more than cars, lorries and buses and the main reason is parcel deliveries from online shopping.
“This is causing real concern as pollution and congestion levels rise in the cities and so infrastructure will be a top priority, as there simply won’t be enough capacity to carry all these vehicles in line with predicted demand.
“Urban logistics is going to be a big topic going forward, with land required on the fringes of the city, giving opportunity for more struggling assets to be repurposed for parcel collection and electric charging points.”
Jon added: “Likewise the way we work is being impacted by technology and the related need to attract more mobile, skilled talent. Business models can be disrupted much quicker than before. Investing in businesses has become risker and all companies need to be ahead of the game in tapping into new ideas.
“Offices are no longer just places you go from 9 to 5 to do your routine job: they are increasingly seen as a service for staff and tool for employers. The rise of flexible working means that companies need to work harder to attract staff into the workplace, putting a new emphasis on design, services, collaboration and the user experience.
“Meanwhile, smart offices will increasingly provide the data and analysis to enable a more personal and efficient working experience. Many companies now recognise that a happier, healthier workplace is more productive.”
Matthew Smith concluded: “It’s clear technology and the need for data storage will increasingly pervade our lives. What was once thought of as an alternative form of investment will become more mainstream.
“We expect investors to look at a much broader range of investments over the coming years.”
