Article | Intelligent Investment
Alternative Assets: The not-so-alternative sectors driving economic growth
An expert guide to maintaining a healthy and balanced property portfolio through alternative assets.
April 11, 2025
Today’s advancing society is forcing the investment landscape to evolve. Recent years, marked by a global pandemic and population growth rates, have exposed the vulnerabilities of certain property sectors. Physical retail stores needed to move online to survive. Hybrid work practices from lockdown mandates pushed the office sector towards flight to quality to entice workers back in.
“All this has done is highlighted the clear under-investment in sectors essential to a thriving economy and community,” says Mark Granter, CBRE’s Head of Alternatives in Australia and New Zealand.
While these changes may have affected the typical performance of traditional property sectors like office, retail and hotels, Mark sees this as an opportunity to reset strategies rather than a setback.
“It’s shown that investors need to diversify their exposure away from those traditional sectors and support these ‘alternative sectors’ if they want to maintain a healthy and balanced property portfolio.”
“All this has done is highlighted the clear under-investment in sectors essential to a thriving economy and community,” says Mark Granter, CBRE’s Head of Alternatives in Australia and New Zealand.
While these changes may have affected the typical performance of traditional property sectors like office, retail and hotels, Mark sees this as an opportunity to reset strategies rather than a setback.
“It’s shown that investors need to diversify their exposure away from those traditional sectors and support these ‘alternative sectors’ if they want to maintain a healthy and balanced property portfolio.”
What are the alternative asset sectors?
Alternative assets essentially account for the sectors that reside outside of the traditional property sectors. They deliver the social infrastructure required for a healthy economy and community.CBRE’s Alternative or ‘Essential’ Industries and Assets:
Energy and Renewables
- Renewables (Solar, Wind, Hydro and Battery Storage)
- Mining
- Oil
- Gas
- Battery
Data Centres
- Digital Infrastructure
- Telecommunications Assets
- Fibre-Optic Networks
Transport and Distribution Infrastructure
- Airports
- Roads
- Ports
- Rail/Intermodal
Living Solutions
- Built to rent
- Build to sell
- Purpose Built Student Accommodation
- Co-Living
- Affordable Housing
- Seniors Living, Aged care, Land Lease Communities
Healthcare and Life Sciences
- Medical
- Consulting Suites
- Hospitals
- Radiology & Imaging
- Mental Health
- Life Sciences
- Laboratories
- Research & Development
Social Infrastructure
- Childcare
- Education
- Recreation
- Self Storage
- Service Station
- Car Wash
- Caravan Parks
- Funeral Homes
What is the growth potential of alternative assets
Despite the 'alternative' label, these sectors are far from supplementary in terms of growth,risk adjusted returns and performance. “Global investors have always had an allocation towards alternatives,” says Mark.“What's happening in Australia is that our local investors and superannuation funds are following suit, recognising the strategic value of these investments.”
And there’s proof in the numbers.
- Renewables: We’re seeing growing investment momentum through HMC Capital’s acquisition of Neoen’s wind, solar and battery assets in Victoria. It’s an acquisition that will form part of HMC’s new $2 billion energy transition fund.
- Childcare: In 2024 there was $657 million in childcare sales - up 26% since 2023 - with the most dominant buyers being both local and Asian investors. Yields for this sector have remained very resilient compared to some of the more traditional sectors such as office, retail and industrial. CBRE also sold 14 childcare centres with a total value of $162 million.
- Data Centres: Most investment activity has been underscored by major merger and acquisition deals and land sales to operators. The two standout transactions were the $24 billion sale of the AirTrunk to Blackstone and HMC Capital’s acquisition of Global Switch and iSeek.
- Land Lease Communities (LLC): In 2024, Atlanta-based Invesco Real Estate made its first investment in Australian LLC. It comes in the form of a strategic capital partnership with Stockland to develop and hold LLCs. The joint venture is expected to inject $1.1 billion in gross development revenue in the early stages. Another major player, Mirvac Group, also announced its binding agreements to acquire one of Australia’s leading land lease operators, Serenitas, in partnership with two other firms for a total consideration of approximately $1 billion.
“Investors are being driven by strong demographic trends, high population growth, an ageing population, and government initiatives,” Mark explains.
“Government investment in childcare, the ageing population driving aged care and retirement. Population growth is also driving living sectors like build to rent (BTR). And then there’s the massive growth in the tech sector driving data centres.”
Seizing the opportunities
The growth potential is exceptional. Most of these sectors are set to grow 50-60%, if not 100%. A prime example is data centres, which are projected to expand from a $23 billion investment universe to $40 billion in the next five years, driven by the shift towards cloud-based applications, streaming services, social media, and artificial intelligence.“Government restrictions could even eventually play into the growth of Australia’s data centre industry, based off the existing restrictions on local data from being hosted on foreign data centres.”
Alternatives sector challenges to be aware of
It’s vital for investors to be aware of any challenges in property to help guide their strategies effectively. “The biggest issue in Australia for alternatives is scale,” says Mark. “Our market is small in comparison to other major global markets, but the growth trend is undeniable.”Other challenges include the evolving clarity around BTR, however Australian Government’s new laws offer a positive outlook with development tax incentives for developers and providers.
The rising operating costs and pressure on the medical and healthcare sector is also another. “There is no quick and easy solution there, but we are confident it will be resolved, as private hospitals play an essential role in the Australian health system.”
Future-proof your growth with CBRE
As a global leader in property for over a century, CBRE is at the forefront of helping investors navigate dynamic growth sectors. With a team of 110 specialists dedicated across the Australian alternative sectors, CBRE leverages its global strength in specialised asset solutions, including global workplace solutions and partnerships with companies like Turner and Townsend.Begin your strongest investment journey in alternatives with us.
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