Trends Watch: Non-Traditional Real Estate

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Jimmy Leong, CEO, Sinae Investment Management.

What is your outlook for RE investing?

I would describe the outlook as cautiously optimistic despite the rebound experienced in 2021 after the lockdown. I believe it is important to adopt a structured investment strategy that provides the flexibility in addressing evolving trends in global real estate asset classes that will ensure success and profitability going forward. The easing of borders globally and the resumption of the workforce back to the office present new opportunities and requirements for ‘non-traditional’ real estate. As a result of the structural impact from COVID-19 on real estate, new trends have and will continue to emerge, e.g., efficiency of the usage of space. Moreover, there is an increasing demand for the use and adoption of technology by consumers, i.e., digitalization, higher quality and green workspaces. As such, proactive asset management incorporating such requirements will be a key success factor in the future.

Where do you see the greatest opportunities and why?

Logistics and data center properties will remain attractive, as the sector is resilient and growing due to the pandemic and demand driven by higher e-commerce penetration and supply chain diversification and reorientation. Another area would be affordable housing, senior living, purpose-built student accommodation (PBSA), commercial, and hospitality focused on value-add opportunities especially in the commercial office space. Opportunities within markets and geographies that have a structural undersupply of assets to meet market demand will be desired. Digitalization, sustainability and green assets will continue to grow. Increasing environmental awareness will continue to drive the ESG agenda as part of the decision-making process for investors, which presents opportunities going forward. Although gateway cities and central business districts (CBDs) continue to be a key focus, there is a growing trend and theme of decentralization, i.e., business hubs that are located outside of CBDs with cheaper rents and growing demand that is driving higher yields.

What are the greatest challenges you face?

The supply deficit of quality assets, cap rate compression resulting in lower yields and returns for investors and the potential impact of currency volatility on returns. 

What keeps you up at night?

For me, it will have to be the impact of present and future geopolitical tensions and any new outbreak of COVID-19 variants or coronavirus will certainly be top of my list. However, I strongly believe that every crisis presents opportunities, and it is important to adopt an open mind in making the necessary adjustments to the way we see, think, react and respond to every situation. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.