Co-living and real estate "alternatives" become mainstream


Hotels, private rented residential, student accommodation and care homes used to be considered "alternatives" to the traditional property investment categories: office, retail and industrial.

No longer. C&W report that £4.7bn was invested into alternatives last year, capitalising on the weakness of the traditional real estate sectors. The categories of those alternatives, particularly in the hospitality and private rented sector, are becoming blurred. For example, how do you categorise a co-living building which allows short- and long-term let and variable levels of servicing? Is it a hotel, an apart-hotel, serviced apartments, student accommodation, private rented housing, a retirement home or a care home? It is (or can be) all of those things.

Funders and investors both in the UK and abroad now recognise the viability and attractiveness of those new business models. Unite Group’s UK student accommodation fund has raised £250m of new equity from external investors and PRS REIT has secured a further £200m of debt facilities.

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Findings by Cushman & Wakefield show that £4.7bn was invested into alternatives [including hotels, residential (held by investors), the private rented sector, student accommodation, care homes and car parks] during the first quarter of the year, marking a 47% year-on-year increase from £3.2bn in Q1 2018. C&W noted that a lack of stock, combined with Brexit-related caution, saw activity across the mainstream sectors of office, retail and industrial weaken by 39% year on year.  There has also been an uplift in capital flow from European investors outside of the UK during the quarter, particularly from Belgian, French and German sources of capital. More than two-thirds of this activity focused on alternative assets.
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