As real estate markets continue to evolve, investors can capitalize on the growing demand for social infrastructure assets. We believe the current environment provides an attractive entry point to investments that can provide long-term stable cash flow. By embracing a finance-first impact investment approach – where both market-rate returns and impact are targeted - investors can contribute to positive social and environmental outcomes while achieving their financial objectives.
Social infrastructure: essential for a brighter future
Following recent headwinds, many of real estate’s toughest challenges are likely in the rearview mirror. As such, we believe that the current environment offers investors a chance to capitalize on emerging trends.
Amidst these shifts, one sector stands out – social infrastructure. We define social infrastructure as real estate that maintains and strengthens social services, that includes sub-sectors like healthcare, education, housing, and justice & emergency amongst others. It intersects with several emerging trends, including demographic change, housing shortages, and sustainability. As governments worldwide struggle to address funding shortfalls, the private sector has a unique opportunity to invest in assets that fulfil society’s fundamental needs.
Demand for social infrastructure consistently outpaces supply, setting it apart from other real estate sectors such as office, retail or hospitality. Its essential nature ensures resilience throughout economic cycles, making it historically less volatile and more resilient. Furthermore, a persistent investment gap in social infrastructure, as illustrated in the chart, indicates minimal risk of oversupply. Consequently, social infrastructure investments may exhibit lower sensitivity to fluctuations in real estate pricing.
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