THE PROPERTY DEVELOPMENT REVIEW
easy to secure in the midst of a housing crisis. This is where BTR comes in, with security of tenure for tenants and dedicated workplaces & bookable conference rooms within apartment buildings for tenant enjoyment. Self-storage helps cater for those that are priced out of the market for larger homes on land or requiring to live in inner city apartments without storage on site. The adoption of AI technologies has surged within just a year and a half, emphasising the evolving landscape of data centre requirements, beyond just cloud storage. These sectors aren’t just growing for the sake of growth, there is pent up demand and severe under supply underpinning the growth potential of these classes and therefore opportunities for investors. Institutional property groups have generated a significant amount of activity within the alternative real estate sector to-date, where do you anticipate the opportunities exist for private investors to begin building their exposure / portfolios to alternatives. Private investor appetite has been very strong in smaller scale self-storage investments often providing superior returns compared to other entry level real estate. Our WA investment sales team have had substantial results in this space of the market; recently offering a portfolio of 3 high performing self-storage properties circa $30m total portfolio value, which received in excess of 130 enquiries ranging from private investors, smaller syndicators, offshore capital and some institutional groups. There are also lucrative value creation strategies inside these businesses which allow for greater growth potential. There is also significant opportunity for private investors and syndicators to absorb some of the existing secondary stock, especially within the healthcare sector of the market. Thanks for sharing your perspectives - in closing, are there any other major investment trends or market themes that you’re analysing within an alternative real estate context that are pertinent for commercial property investors. Thanks for letting me share some insight, the appetite, whilst cautious, is certainly there for alternative asset classes and this is sure to experience significant growth as the market matures. Please get in contact with me, or our market leading Cushman & Wakefield Alternatives team and grab a copy of our recent Alternatives report for the best research & projections for the future of alternative real estate in 2024 and beyond. A copy of the report can be downloaded via this link https://www.cushmanwakefield.com/en/australia/ insights/alternatives-outlook
Based on our conversations, the non-discretionary nature of most – if not all of the sub sectors of this market ensure their viability for investors. The pandemic created clearly defined barriers for what was considered essential and non-essential services. Whilst capital remains cautious, investors are looking beyond 2024 and see significant future growth potential especially within the less mature living sectors such as BTR, co-living, affordable housing & PBSA. PBSA nationally is by far the number one sector our alternatives team are being asked about, with strong investor appetite across the country and especially SA, having some of the lowest residential vacancy across the country. From an Australian perspective, alternative real estate assets are still relatively new to the market with a significant amount of maturity to come - what do you see is this sectors’ long-term growth potential. Certainly the market in Australia & especially South Australia for that matter aren’t as mature markets as the US, and UK especially within the BTR or ‘multi-family’ sector as it is referred to in the US. We can see huge potential for growth - for instance, BTR is considered a core asset class in the US, whereas in Australia BTR is still remains an alternative. South Australia’s first institutional grade BTR project of circa 240 units is underway in Bowden, SA, by Sentinel Australia – the Australian arm of US investment management firm Sentinel Real Estate ($14BN AUM) & their dedicated platform Kinleaf. Offshore capital is expected to draw interest Australia as those groups are clearly more experienced in the dynamics of these markets having witnessed alternatives grow to core asset classification. Clearly, substantial demographic shifts are occurring throughout Australia including an ageing population, shifts in work patterns, greater requirements for cloud computing & demand for different types of rental accommodation - what’s your sense as to how these shifts (and others) are stimulating growth. Its all a reflection of how we now live life; with an ageing population there is more demand for quality aged care facilities & pressure on our local healthcare networks, requiring more facilities to cater for all. The cost-of-living crisis means for the most part, both parents are required to stay in the workforce, meaning more requirement for childcare facilities proximate to the workplace, or home. Flexibility of work means more Australians are working from home meaning more time spent at home, and a need for dedicated office space inside the home, not
July / August 2024 – 79
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