Operational real estate in the UK could offer investors a near-£1tn opportunity, according to analysis from law firm Macfarlanes.
The firm reckons “OPRE” sectors including co-living, build-to-rent and self-storage could more than triple in value from a current £296bn at full maturity, adding that even more traditional real estate sectors such as offices and shopping centres are becoming increasingly operationalised. The firm did not specify a timescale in which it expects its full list of sectors to reach maturity.
The firm pointed to four “megatrends” of digitalisation, decarbonisation, deglobalisation and demographic change as driving investment, highlighting infrastructure investors such as I Squared Capital, Arcus and Stonepeak that have backed cold-storage and data-centre projects.
Macfarlanes partner Dan Marriott said: “The potential in the market for OPRE is substantial. It’s not surprising that we are seeing the living sectors taking the lead in terms of current value and future potential. The emergence of an ecosystem whereby private equity establishes the opportunity and the institutions provide the exit is evidence that OPRE is maturing.
“With a government prioritising housing we do not expect the pre-eminence of the living sectors to alter, but the incredible progress in data centres and trends toward reshoring of supply chains signpost the growth potential of cold storage.”
Earlier research from CBRE found that investment in operational real estate more than doubled during the first nine months of this year compared with a year earlier.
Investment in the UK totalled £6.3bn as of the end of September, a 102% rise on the same period in 2023, with a further increase in investment activity anticipated next year.
Image © Fabian Schmidt/EyeEm
Send feedback to Tim Burke
Follow Estates Gazette
