Alternatives Outlook 2024 Report

GLOBAL ALTERNATIVES OVERVIEW 2023

Australia’s alternatives sector has drawn significant interest from offshore capital with global investors often already well versed in sector dynamics from experience in offshore markets where key alternative sectors are more mature. The Australian alternatives landscape resembles other global markets for the most part, although is structurally less mature when compared to well-established markets such as the United Kingdom and the United States. In these regions, sectors such as BTR, co-living, life science and data centres are firmly established. For instance, BTR holds status as a core asset class in the US (known as multi-family), whereas in Australia BTR is still in its nascent stages and remains an alternative, far from rivaling core sectors in terms of scale at present. In the United States several major alternative transactions occurred despite global headwinds over the past 18 months. Notable transactions included Blackstone's USD 12.1 billion acquisition of American College Communities' 166-property portfolio, alongside significant purchases by Harrison Street and Brookfield which assisted in the tightening of the student housing yield spread in line with core multi family yields in several markets. Furthermore, Brookfield's acquisition of Compass Data Centres for

USD 5.5 billion demonstrates the depth of transactional activity in these more established alternatives markets. Overall, the US market has seen alternatives grow into a significant share of Commercial Real Estate (CRE) investment, totalling USD 289 billion in transaction volume from 2020 to 2023—a 79% increase. Over this period, 39% of capital raised has included alternatives as target sectors according to the Cushman & Wakefield US Research team. Within the UK, Australian-based Aware Super made an ~AUD 900 million investment into UK Build-to-Rent platform Get Living. This significant commitment highlights the strong appetite for exposure into growing living sectors in 2023, despite broader capital market turbulence. The UK living sector environment is highly comparable to the Australian market due to similar societal attitudes towards housing, albeit further along the maturity trajectory. In discussions with global capital, there is an expectation that elevated transaction volumes (by historical standards) across global alternative sectors will persist throughout 2024.

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CUSHMAN & WAKEFIELD