Demand for properties outside of the domain of traditional commercial real estate has seen phenomenal growth in recent years.
From car parks to self-storage the combined effect of demographic changes and urbanization is beginning to pay dividends for savvy investors who have spotted potential in the ‘alternative’ properties.
According to researchs, transaction volumes rose from 10 percent of the overall commercial property market in 2010 to 29 percent in 2016, which marked the sector’s most successful year to date.
Specialists are explains why the drivers for the alternatives sector as a whole will remain positive going forwards.
Why is the alternatives sector thriving?
Much of the demand for alternative property stems from the emergence and subsequent maturing of new asset types, accelerated by changing demographics and the way in which we use our cities.
For instance, the aging population has resulted in a much greater need for assisted living facilities. The fact is that more of us are living longer and in poorer health Alongside this, increasing numbers of people can’t afford to get on to the property ladder, which has led to the emergence of a specialised build-to-rent sub-sector.
In addition, increased global mobility, changing lifestyle patterns and technological changes are all contributing to heightened interest in the alternatives sector.
Which are the key sub-sectors to watch?
Over the past year there has been continued growth in the more mature alternative sub-sectors such as student accommodation, which was the largest sub-sector in terms of total investment at £3.2 billion in 2016, along with care homes and build-to-rent.
A newer sector to watch out for is retirement living, which has been big in Australia and is now increasing in prevalence in Europe.
Another important sub-sector is self-storage. Self-storage is embedded into the culture of North American cities and has recently been expanding in Europe. This is because there has been a huge wave of urbanization – more and more people are moving into cities and living in smaller accommodation so they’re putting their belongings into storage units.