The case for alternatives in uncertain markets

Investor demand for alternative real estate sectors in Europe continues to remain at record levels. Sectors once viewed as niche have established themselves as part of well diversified real estate portfolios, with specialised strategies such as student accommodation, build-to- rent, life sciences and healthcare now regularly featured among the top of investor’s sectoral wish-lists.

These investors, in turn, have both allocated and deployed more capital to alternative sectors over the past few years. In fact, alternatives’ share of total UK real estate investment has grown from just 2% in 2000 to 20% in 2021.1 Given the current macroeconomic headwinds, protracted inflationary environment and rapidly shifting capital markets, it is likely these sectors will attract greater inflows of capital.

Alternatives in Europe can point to demonstrable resilience and defensive attributes through multiple black-swan events that have acted as a litmus test for investors’ investment rationale and recent pivot to alternatives. These black-swan events show that alternatives are driven by positive demographic changes that are well underway and forecast to persist in Europe over the medium to long-term.

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Supporting documents

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