Alternative real estate offers top returns in uncertain market

In 2025, alternative real estate sectors are the prime focus for investors seeking strong returns and added value, according to strategic property consultancy Rapleys. 

Self storage

Their latest report highlights significant opportunities for those looking to diversify beyond traditional asset classes.
Despite the ongoing challenges in the UK market, marked by persistent inflation and high interest rates, many institutional and international investors are eager to deploy capital where they can find both value and consistent income. Rapleys' report emphasizes the robust performance of industries with strong underlying fundamentals, particularly the living and healthcare sectors.
Affordable housing, BTR, dentists, and veterinarian clinics are all experiencing high demand and rental growth, a trend expected to continue for the next three years. Additionally, government initiatives are boosting sectors like data centres, which benefit from strong support and favourable planning, along with infrastructure and renewables, which are a renewed focus for the Labour Government, and, of course, housing.
The UK real estate market is also attracting significant interest from overseas investors, particularly from North America, Japan, Hong Kong, and Singapore, largely due to economic and geopolitical instability in their home markets.
Robert Clarke, senior partner at Rapleys, said: "Compared to 2024, the outlook for these sectors has changed—not only due to market demand but also the new government’s support across housing and infrastructure in particular. Investors need a partner that understands the lifecycle of each asset implicitly, from planning to transactions to building, management, and exit, to guide them through and leverage this very real-time opportunity, while operators in these industries will also need to manage costs, their portfolios, and liabilities.”
Rebecca Harper, head of investment at Rapleys, and Scott Mitchell, partner in Investment, added: “Alternatives open up a whole new raft of income and opportunities that, with the right advice, will deliver double-digit returns over three, five, and 10-year horizons.”
The ongoing trends of flexible, hybrid, and remote work are expected to continue driving demand for Flex spaces, food stores (especially convenience stores), drive-thrus, and self-storage. Care homes and labs are projected to maintain their strong performance.
Furthermore, alternative assets offer attractive conversion opportunities, allowing for the repurposing of outdated offices and car dealerships into housing, care homes, and flex spaces.