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Adapting to a Changing Real Estate Landscape
The days of passive ownership in real estate are fading as investors realize the importance of active ownership in today’s rapidly evolving market. Understanding the effects of market changes on various regions, asset classes, and tenant demands is critical to success. By adopting a customer-focused, company-driven approach, investors can identify how assets can adapt to societal and business trends, ultimately ensuring long-term income and value.
Three Pillars of a Future-Proof Real Estate Strategy
To keep up with the changing market dynamics, real estate entrepreneurs must concentrate on three factors: sustainability, operational excellence, and innovative solutions that offer flexible contracts and investment options. This trio of focus areas forms the foundation of a future-proof real estate strategy, which we call the SOI approach.
Sustainability and Operational Excellence of Assets
Sustainability and operational excellence are connected at the asset level. Real estate investors can manage assets in a way that enables operational efficiency, minimizing the use of scarce resources, waste, and carbon emissions. The method may necessitate extra services, in-depth management, or increased expenses to enhance energy efficiency.
By integrating sustainability and operational excellence, investors can secure the value of assets for occupants, supporting their business models and rent-paying abilities.
Solutions That Benefit Both Tenants and Owners
Offering flexible solutions for tenants and investors helps align asset operations and income with the success of the occupier’s business. Although many real estate investors and banking specialists have hesitated to include this aspect in contracts, embracing this approach can create a virtuous cycle.
By treating each asset as an individual business, owners can support tenants through changing market conditions and economic statuses. This partnership model optimizes both parties’ financial security, preventing bankruptcies, vacancies, and obsolescence.
Aligning Investments with Sustainable Trends
Identifying long-term trends that influence real estate demand worldwide is essential for successful portfolio construction. Four key trends to consider are:
Technology & the knowledge economy
Aging populations & demographic shifts
Connecting people & places
Investing in assets that align with these trends ensures a market tailwind, making it easier to achieve success. Therefore, carefully assess market segments for the top overall value.
Finding the Right Execution Partner
Operational excellence includes partnering with experts who understand local supply and demand dynamics and can service assets effectively. In addition, the right partner should know how to convert long-term trends into specific market opportunities and align investment performance with occupiers’ company achievements.
Exploring Different Investment Structures
Various investment structures can help cater to governance preferences, investment opportunity duration, and market timing. For example, mixing direct investments, open-ended funds, closed-ended partnerships, listed funds, and real estate loans can optimize access to operational excellence and open up the entire real estate investment market.
A Disciplined, Flexible Approach for Long-Term Success
The SOI framework is designed to underpin every investment and asset management decision, ensuring sustainable outperformance of clients’ investment objectives. This flexible, agile approach fosters long-term partnerships with stakeholders, including investors, tenants, society, and the environment, leading to a future-proof real estate portfolio.
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