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31 July 2019

UK Alternatives Investment Index Report: H1 2019

Investor appetite for UK Alternatives remains incredibly high, with investors attracted by the security of commercial real estate and returns which remain in excess of those available from bonds and debt markets.

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The report provides an overview of recent activity and currently achievable yields on prime and secondary investments across various subsectors within the healthcare, childcare, medical, hotel, licensed, retail and leisure sectors.

Key findings of the report show that across UK Alternatives average yields on prime investments, which excludes super-prime investments, ranged between 3.5% and 7.5%, although the picture was diverse between sectors. 

Yields have generally continued to tighten across the majority of the evaluated sectors, as UK Alternatives continue to mature – an ongoing story that has been evolving for the past few years. This has led to a greater appetite for risk amongst investors, meaning a greater level of interest in pursuing management contracts (whether subject to minimum guarantees or not), turnover rents, profit share agreements and the like. This enhanced risk appetite, as well as a shortage of investment-grade stock, has also manifested through increased interest in development deals.

The report involved input from a panel of sector experts from across Christie & Co’s consultancy, valuation, brokerage, investment and development service lines.