Social and economic changes around the world over the last number of years have affected the real asset industry, with the COVID19 pandemic of 2020 amplifying and accelerating certain emerging trends. These changes make keeping your real asset portfolio optimised more important than ever.
Here are some of our top “ones to watch” for 2020 and beyond.
New types of residential development
· Older people are an increasing population, and this generation expects to live comfortably on their own in their old age, rather than in a nursing home, yet with age-appropriate building design and access to health care and other support. New styles of residential development incorporating custom-designed, independent, serviced units demanded by these customers have started to appear and such constructions are likely to enjoy strong demand.
· Similarly, numbers of students attending third level education have increased and their requirements have also changed. While a few decades ago, “bedsits” and shared houses were the most common form of student accommodation, single units in custom-built student residences are fast becoming the go-to student housing format.
Storage, warehousing and logistics
· More apartment living and increased mobility of workers between cities and countries have both created demand for individual storage facilities, in many countries.
· A huge rise in e-commerce, amplified by COVID19 confinement, has shifted demand from individual retail units and shopping centres to warehousing, fulfilment and logistics centres.
· Construction of specialised data storage centres and cloud server facilities has become significant around the world, in line with a huge focus on gathering, retaining and analysing data in recent years. Increased IT network traffic and widespread adoption of “cloud storage” and “infrastructure as a service” (IaaS) are all contributory factors.
Infrastructure for the future
· The transition towards renewable energy sources (such as wind farms and solar energy installations) has really got off the ground in recent years, due to more competitive costs, more ambitious government targets and commitment of large corporates. By the end of 2019, more of the UK’s energy was already produced by renewable than non-renewable sources. This area has received a lot of investment in the last couple of years and the transformation of the global energy landscape still has a long way to go…
· Telecoms and digital infrastructure are also seeing significant growth. The instance of data centres described above (which straddles real estate and infrastructure) and the much-publicised roll-out of the 5G network are two major examples. Both of these areas will continue to grow, in line with our insatiable appetite for data and connectivity.
“Change” has certainly been an apt descriptor of the last six months, with no sign of relent at present. The nature of change is that it is uncertain. So we believe that diversification and being open to different opportunities will be increasingly important in real asset portfolios.
Image courtesy of Zbynek Burival.