WealthWhys: Andrew Gill, fund manager, TIME Investments

Elsewhere in the video, Gill highlights the attractions of a hybrid approach to investing in property. “To take the hybrid fund we run, a large proportion of it is REITs, which are very liquid, are traded on stock exchanges and give you access to strong growth platforms and different diversified sectors,” he says. “So this gives you a real exposure to long-term property trends.

“To balance that, though, you also have a proportion in direct property. This tends to be almost perfectly uncorrelated to other asset classes and is very low-volatility – but also you get a direct rental income stream and you can really see the underlying trends directly at the coalface and what is happening with property more widely.”

Active edge

Finally, when it comes to property investing, why does Gill believe active management has the edge over a passive approach? “Property is often alluded to as a homogeneous asset class but, if you look at the underlying subsectors, they can move very differently,” he replies.

As an example, Gill points to the massive change in retail habits in recent years as people increasingly shop online, adding: “We have seen a huge transfer of value over the last decade from shopping centres into logistics. If you are passive, you are effectively forced to own wherever the stock exchange is at that point – whereas, with active management, you can really allocate to the sector winners and be on the right side of structural change.”

Why should investors consider an allocation to real assets – and property in particular?

Real assets tend to provide an uncorrelated return versus other asset classes. Also, most sectors within real assets give you stable and diversified income – and property, in particular. I mean, look at all the ‘mega’ sectors and trends that are going on at the moment – such as artificial intelligence, logistics, healthcare – they all need property or multiple forms of property to operate. So really property is fundamental to how the world operates.

As for why property now? Obviously we have been through a rapid rise in interest rates and obviously we have got some near-term tension but, in the longer term, the demand/supply dynamics, rental growth – all of these are coming into favour for property. So we think there is a real ‘sweet spot’ in terms of entering property now for anyone who is either out of this completely or is underweight.

In which property sectors do you currently see the most compelling opportunities?

The usual answer is data-centres but I am going to steer clear of those and pick out two others. I mean, healthcare is another obvious one – you know, we have ageing populations and governments struggling with the burden of high public debt. And so, with that, modern care homes are in great demand with, you know, an ageing and sicker population.

Also, looking more positively, Western governments and the NHS are looking more at preventative healthcare – that is a lot cheaper than treating people in hospitals. So there is a huge investment opportunity for local healthcare and GP surgeries.

Elsewhere – and maybe slightly more nuanced – offices. You look at London office space – brand new – and there is not enough of it. And everybody wants that – you don’t want secondary offices; you don’t want old obsolete ones – but, in terms of brand new, there is just not enough of it. So we think there are some very attractive returns to come out of this area.