Alternative assets gain traction in UK property investment market
A recent article published on Invezz has highlighted that there has been a significant rise in investor interest in the alternative UK property investment market.
The article suggests this new trend has emerged as a result of the UK’s property market increasing popularity among domicile and overseas investors.
Favoured alternative assets include care homes, student property, off plan buy-to-let and commercial assets such as offices.
A new report suggests that people are now more open to assets which are considered ‘alternative’ as, over the last few years, they have become some of the best performing property markets.
Rob Martin, director of research, Legal & General Property, commented: “We see the increasing allocation of institutional capital to real estate sectors currently considered alternative as a structural trend.”
A report from Legal & General Property shows that since 2003, portfolios which contain residential and ‘other’ assets increased by 4.2% to 11.3%.
Demand for alternative assets to rise by 2019
In 2014, Jones Lang LaSalle reported that investment in alternative assets in the UK will reach £20 billion by 2019.
“Alternative asset classes are becoming increasingly attractive to institutional investors, with a particularly positive outlook forecast for the next five years,” Chris Ireland, UK chairman and lead director of capital markets at JLL commented on the survey’s findings.
The survey suggests that higher yields and a greater knowledge of the alternative sector has helped to propel alternative assets into the mainstream.
Diversifying a property portfolio
We have all heard of the saying, ‘Don’t keep all of your eggs in one basket’. This phrase is particularly important when it comes to property investment.
Property experts believe that this reasoning could be why investors have taken an interest in alternative asset classes. Spreading risk through investing in multiple asset classes may be the key to a successful property portfolio.
In this sense, diversity allows an investment portfolio to weather market conditions better, as the variation of asset will enable risks to be more spread out.
Property experts suggest that investors will continue to purchase alternative UK property investments to generate higher than average returns.