Real estate investments: four alternative assets to consider

In the midst of a persistently complex macroeconomic landscape, alternative asset classes continue to hold significant allure as avenues for real estate investment. But while some are consolidating, new ones worthy of attention are also emerging.

The search for diversification to mitigate market fluctuations continues to motivate investors to explore beyond traditional channels and turn towards alternative asset classes, characterized by their historically low correlation with traditional financial markets.

While alternative assets like data centers, senior housing, and student housing are consolidating their presence, aligning with core real estate product, new segments are now emerging, offering attractive opportunities for real estate investments.

In this article, we'll delve into four categories of alternative real estate assets that are rapidly capturing the interest of investors, showcasing their resilience and considerable potential for outperformance.

Renewable energy

The renewable energy sector offers an interesting opportunity for real estate investors looking to blend financial gain with environmental responsibility. Investing in assets such as solar parks, wind or hydroelectric plants not only promises favorable financial returns but also actively addresses climate change and fosters a more sustainable future.

The “Renewable Energy Market Update – Outlook for 2023 and 2024 report by the International Energy Agency (IEA) highlights the rapid expansion of the renewable energy sector. This growth is certainly fueled by the surging demand for electricity driven notably by the transition to electric mobility and increasing electrification across various industries.

Moreover, government initiatives play a pivotal role in supporting this sector. In Italy, for instance, one of the key objectives of the National Recovery and Resilience Plan (PNRR) is to stimulate the development of industrial supply chains within the renewable energy sector, alongside the establishment of renewable energy communities.

Agribusiness

Agribusiness is another compelling option for alternative real estate investments, combining financial resilience, technological innovation, and environmental sustainability.

In a landscape where the global population is poised to exceed 10 billion people by 2050, agriculture grapples with escalating food demands, requiring a substantial uptick in productivity. Tackling this challenge entails embracing novel technologies and sustainable farming methodologies crucial for securing food provisions without compromising the environment and natural resources.

Italy's agribusiness sector, hailed by Coldiretti as one of Europe's most eco-conscious, leads the charge in championing sustainable agricultural practices, contributing not only to soil and water resource conservation but also to the economic development of local communities. It's evident, therefore, that investing in this sector not only promises significant financial dividends but also enhances corporate reputation through the adoption of socially responsible initiatives.

Glamping and luxury campsites

Glamping is a growing niche in the hospitality sector It has gained considerable traction in recent years, especially with the surge in demand for outdoor experiences sparked by the pandemic.

Unlike traditional campsites, glamping (a term coined from the blend of "glamour" and "camping") sets itself apart as an exclusive and sophisticated product, marrying the serenity of nature with the services typically associated with five-star hotels. From luxurious tents to treehouses and bubble rooms, accommodations boast amenities such as real bedding, en-suite bathrooms, air conditioning, and Wi-Fi.

This fusion of comfort and wilderness caters to a diverse clientele, including families in search of adventure, discerning travelers, and anyone craving an outdoor escape with all the indulgences.

From a purely financial perspective, glamping offers an interesting opportunity for alternative real estate investments in the hospitality sector. Projections suggest a global market poised to reach $5.94 billion by 2030, with a compound annual growth rate nearing 9%. As such, this asset class holds the promise of substantial long-term returns.

Self-storage centers

The demand for self-storage, i.e., rental spaces where individuals and businesses can securely store their belongings, is rapidly growing. This growth is driven by evolving social and economic factors, such as the trend toward smaller homes and the wider adoption of remote work, which is redefining the standards for workspaces.

According to forecasts by the market research company Research and Markets, this sector is poised to exceed $85 billion by 2030 Despite Italy currently lagging behind with only around 90 self-storage facilities nationwide, there exists significant untapped potential for investment. Often dubbed as "hotels for things," these storage spaces present numerous advantages for investors.

Often dubbed as "hotels for things," these storage spaces present numerous advantages for investors. They require lower startup and operational costs compared to other commercial assets, leading to broader profit margins. Moreover, the rental model, typically on a monthly basis, enables swift adaptation to economic fluctuations. Not to mention that it is a low-emission sector, thanks to the limited number of people present in the facilities and the low energy consumption of the buildings, making it an attractive option in an era where investment decisions are increasingly influenced by ESG criteria.