Newspaper article The Journal (Newcastle, England)

Quality Not Sector Is the Key

Newspaper article The Journal (Newcastle, England)

Quality Not Sector Is the Key

Article excerpt

Byline: INVESTMENT Iain Laing? 0191 201 6429 ?

WITH the UK's traditional property investment sectors becoming increasingly polarised, the quality of assets is becoming far more important than sector, says new research.

The report from property adviser GVA illustrates how alternative investments have outperformed its more traditional peers in recent years, and how that trend is unlikely to change, at least in the shorter term.

Good covenants and long leases on alternative investments present an immediate advantage. Over a fiveyear period beginning at the peak of the market, returns from mainstream sectors were negative (-0.7% pa average), while alternative sectors generated positive returns of circa PS4% per annum.

ANALYSIS Beanland, Simon Beanland, senior director and head of investment at GVA, Newcastle, said: "If we talk of relative performance, as well as perhaps initiating a greater appetite for risk, some alternative sectors are outperforming the more traditional investment classes.

"Broadly speaking, investors are still relatively unfamiliar with altern-ative sectors, and so perceive a greater degree of risk. However, longer leases and fixed uplifts mean that the reverse is frequently true.

"Diversity of product, prime yields at or below 6% with further scope for compression as the market matures, longer leases and fixed uplifts combine to offer a highly-attractive alternative."

This is the first research to unravel the facts surrounding each alternative sector and the prospects they offer.

The sectors focused on in the report are automotive, data centres, energy and waste, healthcare, hotels, leisure and student accommodation, all presenting benefits of varying degree.

Simon Grimley This is well demonstrated here in the North East by two transactions where GVA advised both investment funds. …

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