In the latest episode of Real Catch Up, the BNP Paribas Real Estate podcast that observes, analyses and dives into the real estate sector and the city of tomorrow, we discuss investment. Although the health crisis of recent years initially threw the real estate sector off kilter, it was able to adapt and bounce back. The situation helped to develop new, so-called alternative assets, while also confirming the central role of ESG (Environment, Social and Governance) criteria.
Larry Young, Senior Director, Central London Investment at BNP Paribas Real Estate UK, talks us through how these changes are shaping the world of real estate investment.
ESG becomes a prerequisite
Another cornerstone of real estate investments is increasingly based on alternative assets. “Investors have turned to certain asset classes that have emerged as winners from the pandemic. For example, there are what we call Bed & Sheds, so everything related to the residential market and logistics, which are working well. But there are many new asset classes – health care, life sciences for example – that have become more important due to Covid-19, but also due to the increased consideration of ESG criteria”, Larry Young analysis.
Finally, two major factors will have an impact on real estate investments in the years to come. First of all, major transportation infrastructure projects will greatly facilitate urban mobility, increase land prices and promote the establishment of buildings or their renovations, and therefore subsequent investments. For example, thanks to the Grand Paris project, the METAL 57 office building, the BNP Paribas Real Estate demonstrator located in Boulogne-Billancourt, “will benefit from one of the main new stations built nearby. This new line will also make it possible to go to La Défense or Charles de Gaulle airport from Boulogne-Billancourt,” reports Larry Young. Secondly, banks will also have to closely monitor these issues and changes. While financial institutions are still timid about alternative assets, they remain “essential for the investment market”, underlines Larry Young.
Alternative assets: the investments of tomorrow?
With the world around us changing rapidly, influenced by such events as the Russia-Ukraine war and rising inflation, BNP Paribas REIM now advocates for highly resilient, sustainable investment options. Options that are able to stand the test of time for what the future may have to hold. This is why housing for various generations from students to the elderly is now of growing importance and the importance of supporting healthcare sectors for an ageing population is something that our society is becoming more and more dependent on.
In this new edition of Living Thoughts by BNP Paribas REIM, we take a look at the fundamentals of the investment market and the positive impact that environmental and sustainable investment can have for our world.
With the growth of niche property types combined with existing asset types, the interaction between the two is of ever-increasing importance. How then to leverage the drivers behind the investment trends? Find out by requesting your copy of An Alternative View on Real Estate.
In connection with these fundamental changes, investors are working more and more with the users and occupants of their buildings in order to anticipate these issues. These trends are at the heart of real estate investment strategies
