LGPS webinar finds built environment a “clear investment opportunity”

LGPS Spring Webinar: The Built Environment

Residential property an attractive investment proposition for local government pension scheme managers, delegates heard in Room151’s latest LGPS Quarterly Webinar.

Commenting during discussion on the development of the build-to-rent sector, Paddy Dowdall, assistant executive director of Greater Manchester Pension Fund, said: “The clear message is that this is a clear investment opportunity.”

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Panellists and delegates were exploring LGPS investment opportunities in the built environment.

The webinar’s first session focused on the burgeoning build-to-rent market which sees institutions invest in buildings of 50 or more residential units for rent.

Built-to-rent investment is relatively new in the UK unlike other countries where it is considered a well-established asset class, particularly in the UK.

Dan Batterton of Legal & Gerneral Investment Management and a expert in build-to-rent, said investments can produce returns of 6-9%, and offer inflation correlated income growth with downside prection.

Dowdall said: “I am often asked about the twin aims of our local investment policy and I always say, ‘Its the return first and then the positive impact’.

“And I think housing—and affordable housing with small ‘a’—presents an almost unique opportunity where there is almost no need to compromise at all on the risk adjusted return, the opportunity is so clear.”

Louise Evans, head of asset management, Franklin Real Asset Advisors, spoke about investment opportunities in “social infrastructure” buildings and discussed how the pandemic had undermined the markets for property elsewhere in hospitality, retail and offices.

The social infrastructure market—such as property in the health and education sectors, as well as court houses, police and fire stations and sports facilities—have fared much better.

Evans added these sectors, along with logistics and life sciences centres, were likely to continue rising in value.

Summing up the future for social infrastructure investment, she said: “The outlook is positive with some uncertainty in how behavioural changes that have come about that may have a permanent impact on how we use buildings.”

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