Going forwards, our conviction is that real estate investors need to adopt a stock picker’s mindset rather than a sector allocation focus. Asset selection is key, as we are clearly seeing a bifurcation of returns within sectors and markets. Business plans need to account for evolving tenant needs and sustainability regulations, and detailed local knowledge is required to fully maximise returns.

While this claim could have been made over the past few years, there are many reasons we believe it is increasingly true today. Recent history has seen persistent trends in the relative performance between real estate sectors. Looking ahead, while there may be some scope for interest rates to reduce as inflation abates, this is likely to provide limited scope for real estate yields to compress. Slower economic growth means not all assets will see the same demand, so we believe diligence is needed to identify NOI growth. And growing regulatory pressures regarding sustainability will d