From alternative to mainstream: the assets gaining ground in real estate investment
The Spanish real estate market is broadening its horizons. Data centres, healthcare, senior living and life sciences are gaining ground in the investment strategies of funds and operators, although each segment is at a different stage of development. Their appeal depends on the demand they address, the expertise of the operators managing them, and their ability to deliver long-term returns.
These issues were at the heart of the editorial roundtable “Opportunities in Alternative Assets”, organised by Observatorio Inmobiliario, part of Grupo Iberinmo, in collaboration with ESCP Business School, which hosted the event at its Madrid campus. Sponsored by Urbanitae, Nhood and Grohe, the discussion was moderated by Roger Cooke, Editorial Advisor, and Teresa Montero, Editor of the magazine.
The roundtable brought together Jaime López, Head of Capital Raising, Business Development and Clients at Grupo Azora; Gonzalo de Troya, CIO of Healthcare Activos; Gonzalo Navarro, Investment Director at Urbanitae; Alberto Martull, Head of Corporate Capital Markets & Data Centers at JLL; Pedro Rizo, Iberia Business Development Director at Nhood; and Gabriel Cabello, Real Estate Partner at Clifford Chance.
The discussion highlighted a transformation that goes beyond investors’ capital allocation preferences. Across these segments, the way real estate products are conceived is increasingly linked to the activity they will accommodate and the needs of the operators that will ultimately run them.
For López, of Azora, investor interest is closely related to the growth potential these segments offer compared with more traditional markets. “Alternative assets in Spain arguably represent an even greater opportunity than traditional assets,” he explained during the discussion.
The company’s strategy reflects this interest. It is currently closing a multi-strategy fund for Spain and maintains exposure to data centres, among other segments. López believes there is still significant room for growth in several of these markets in Spain, with some, such as life sciences, still at an earlier stage of development.
Healthcare: from alternative asset class to critical infrastructure
Gonzalo de Troya, of Healthcare Activos, explained that investors entering the sector are looking for long-term contracts, stable cash flows and inflation-linked income. The pandemic also changed perceptions of these assets: before COVID-19, healthcare was considered a “highly alternative” segment; afterwards, it increasingly came to be seen as critical infrastructure.
Gonzalo Navarro, of Urbanitae, pointed out that, in order to deliver the returns investors are looking for, the analysis must start with genuine demand and pay particular attention to the company that will operate the asset. “The first thing we show is the due diligence we carry out on the company that is going to operate that asset,” he explained.
This approach requires looking beyond the analysis of land, location and the conventional residential product. What matters is who will manage the property, how it will be operated, and whether that activity can support the expected returns.
Senior living shares some of these characteristics. Although demand already exists and demographic trends point to further growth, the professionalisation of operators and the quality of the product will be essential in turning that demand into investment opportunities.
Location brings another variable into the equation. Madrid retains a prominent position in the data centre market due to its connectivity and market size, while Barcelona and, in particular, Aragón have gained ground. Alberto Martull, of JLL, highlighted Zaragoza’s positioning amid changes in the sector and pointed to the emergence of new opportunities: “New market niches are beginning to emerge.” Among them, he mentioned potential demand for smaller data centres in regions such as the Valencian Community.
Pedro Rizo, of Nhood, observed that investment is becoming increasingly less focused on any particular asset class or location. “When there is a lot of capital and that capital is asset-agnostic, it is geographically agnostic as well,” he said.
“The alternative market is ceasing to be alternative as it becomes established”
Pedro Rizo, Iberia Business Development Director at Nhood.
Gabriel Cabello, of Clifford Chance, compared the situation in Spain with that of the United States and highlighted two obstacles: coordination between public authorities and the lack of predictability in the regulatory framework, “which changes quite frequently.” Changing the rules while projects are under development, he warned, “affects the market’s credibility.”
The discussion also referred to an analysis by Mario Draghi published in the Financial Times, according to which a data centre takes 24 months to build in the United States, compared with 42 months in Germany. The comparison helped place regulatory challenges within a broader European context, where participants noted that levels of regulation are similar.
The conversation then returned to the living sector. Navarro argued that, in senior living, the key issue is not whether demand exists, but rather the professionalisation of the market. According to the figures he presented, the ten largest operators account for 20% of the assets under management.
De Troya distinguished between senior living and nursing homes, where healthcare provision plays a more significant role than accommodation services.
He therefore stressed the importance of operator specialisation: “It is absolutely essential to work with an operator that specialises in providing this type of service because, ultimately, you are caring for vulnerable people who are on medication and have multiple medical conditions, whether in a hospital, a clinic or a nursing home.”
He also positioned assisted living between senior living and nursing homes, as a form of accommodation for older people that is typically linked to a residential care facility.
“The debate is not so much about demand, which already exists, but about the professionalisation of the senior living market”
López Marco acknowledged that Azora is closely monitoring the senior living sector, although he warned of potential reputational risks for investors. “The problem is that we have not been able to create the right product,” he said.
He also referred to prices exceeding €5,000 in cities such as Madrid. In his view, generational change will reshape demand: “Older people today have much higher levels of home ownership than the generations that follow them are likely to have.”
This shift, he argued, could expand the market, “provided that we are able to create an offering that is acceptable, which we still do not have today.”
