🚀 Unlocking the Untapped Potential in Operational Real Estate: A New Frontier for Investors

🏢 Operational Real Estate: A New Market Opportunity 

Operational real estate, defined as an asset where income and values are linked to the performance of an underlying operator, is emerging as a promising market in the UK. A report published by London-based law firm Macfarlanes estimates that operational real estate markets in the UK could reach a staggering £760 billion ($967 billion; €885 billion).

Traditionally associated with operationally intensive asset types such as hotels, student accommodation, and senior living, the report argues that operational structures can be applied to traditional and emerging sectors alike to unlock potential returns for investors.

🔄 Revitalizing Assets with Operational Concepts 

Operational real estate is increasingly being used to revitalize traditional sectors. For instance, a specialist operator could breathe new life into a shopping center with a more experiential approach to shopping, or an enhanced service provision with a focus on wellbeing could lure workers back to offices.

📈 The Evolution of Real Estate 

The growth of operational real estate markets in the UK represents a natural next step in the evolution of real estate. Asset owners are increasingly practicing an active management approach to drive up returns. While operational real estate investments are typically in the wheelhouse of the value-add or opportunistic investor, there is growing appetite for operational strategies among core investors.

💰 The Attraction of Higher Income Returns 

Operational real estate provides tools to focus on driving the income component of the return, which is particularly attractive in the current economic climate where capital values are being challenged. Fund manager Hines, which has been investing in operational real estate for several years, set up its own operating company, Aparto, which manages 17 operational student housing assets across the UK, Ireland, Italy, and Spain.

🎯 The Intrinsic Cashflow Benefits of Operational Models 

In today's economic climate, where returns are being squeezed by interest rate rises, higher costs, and declining capital values, managers are having to work harder to provide their investors with required returns. This could drive greater interest in operational models because of the intrinsic cashflow benefits derived from managing the operations as well as the real estate.

⚖️ Balancing the Risks and Rewards 

Investors are taking a more cautious approach to exploring operational real estate opportunities in the current market context, considering whether the additional risks are adequately compensated and priced into the assets. However, the different risks involved in operational real estate investments can be addressed with the right governance in place, such as operator due diligence, incentivizing operating partners, and monitoring them on an ongoing basis.

🤝 Partner with PHOREE Real Estate 

As the operational real estate market continues to grow, partnering with a trusted and experienced real estate broker is crucial. PHOREE Real Estate, with its American Management and experienced Wealth Management Team with 40 years of experience in the United States of America, is your ideal partner.

Our expertise spans across wealth management, real estate, and other asset classes, making us the No. 1 Broker in the region. We understand the market trends, we know the best investment opportunities, and we are committed to helping our clients achieve their investment goals.

In conclusion, the operational real estate market in the UK offers a golden opportunity for investors. With PHOREE Real Estate by your side, you can navigate this burgeoning market with confidence and make the most of your investments. So why wait? Partner with PHOREE Real Estate today and let us guide you to your dream property in the UK!