The wealth manager has over the last 18 months moved a chunk of its property investments into areas associated with segments such as healthcare, aiming for yields and smoother returns.

Investec Wealth & Investment revealed it has shifted around £200 million of property assets in the UK from traditional investments towards more infrastructure-leaning vehicles to reduce volatility and capture yields.

The wealth manager has over the past 18 months redeployed around 20 per cent of its real estate exposure to vehicles that hold freeholds of GP surgeries, student accommodation, care homes and theme parks, it said. The latter property segments are increasingly attractive for income-seeking retail investors because they are exposed to less economically sensitive areas of real estate. They also invest in stable assets with robust cash-flow profiles and the prospect of capital growth as rents increase over time.

The move shows how investment managers, eager for yields in a low-rate world, are turning to sectors such as infrastructure – although the term is not a precise one. In areas such as GP surgeries or student accommodation, for example, there may typically be an element of public sector involvement and protection against inflation, as can happen with projects built with private and public funds.

“Property as an asset class is primarily a source of rental income and, post Brexit, projections of a cut to UK base rates will offer support. However, fears of a slowdown in the UK economy have meant that many traditional real estate investments have been hit by rising risk aversion. Many investors are looking for a healthy level of income without taking on too much economic risk in terms of voids or tenant defaults, and these non-standard property plays are ideally suited to this objective,” said Chris Hills, chief investment officer at Investec Wealth & Investment. 

In the case of the GP surgeries segment, the wealth manager has invested in Real Estate Investment Trusts such as Assura, Primary Health Properties and Medicx; it is now one of the largest external shareholders in these REITs. These vehicles invest in UK primary health property leased principally to GPs, NHS organisations and other healthcare users, offering dividends of around 5 per cent and government-backed cash-flow.

As for student accommodation, IW&I has invested in two quoted student accommodation funds, Empiric and GCP. With premium care homes, the wealth manager has put money into Target Healthcare, which owns a portfolio of UK care homes. This fund, which owns over 30 freehold assets with long leases, offers a dividend yield of over 5 per cent. Finally, turning to hospitals and theme parks, the wealth manager has invested in the Secure Income REIT, which owns a freehold portfolio of 26 health and leisure real estate assets producing a net initial yield of 5.3 per cent.

Infrastructure investing has waxed in recent years. Firms as diverse as Switzerland-headquartered Partners Group and Australia’s Macquarie, for example, have become prominent players in the space. HSBC, to take another case, spawned an infrastructure investment trust that eventually became HICL Infrastructure Company in 2011.

According to Preqin, the research firm, in 2015 the total global deal value of the sector stood at $349 billion. There were $22 billion of total capital distributions in the first half of that year (more recent data is not available). Some 46 unlisted infrastructure funds reached a final close last year. At the end of 2015, the unspent money, aka “dry powder” of such unlisted funds stood at $108 billion. In the listed infrastructure funds space, there are more than 40 funds that are tracked by Preqin alone, according to a report it issued in early 2014, suggesting that figure is likely to be larger today.