Aviva Investors Real Assets House View 2021: digital infrastructure and long income offer investors best growth opportunities

(London) – New-build digital infrastructure is expected to deliver the highest returns, whilst the UK looks set to outperform Europe across several real asset sectors and strategies in the medium term, according to the second annual Real Assets House View from Aviva Investors, the global asset management business of Aviva plc (‘Aviva’).

house view

The Real Assets House View, which brings together the views and analysis of investment teams in real estate, infrastructure and private debt, provides a foundation from which Aviva Investors can make relative-value decisions regarding multi-asset allocations.

Aviva Investors expects new-build digital infrastructure such as rural fibre broadband to deliver the highest total return over five years for institutional investors. This view reflects the findings of Aviva Investors’ 2020 Real Assets Study, where pension fund and insurance companies surveyed said that capital growth is increasingly viewed as an “integral” or “important” part of their real asset investments.

Mark Versey, Chief Executive Officer1 at Aviva Investors, commented:

“Whilst resilience and cashflow-matching remain strongly favoured characteristics of real assets, investors are increasingly aware of the return diversification benefits on offer, and that is reflected in how investment strategies are evolving. Digital infrastructure is a good example of this trend in action, which also carries a significant societal benefit, for example better connecting communities and helping to support businesses in rural locations.”

Aviva Investors also expects UK levered long-lease real estate to deliver high relative-value, with the sector’s cashflow stability and the availability of competitively priced, long-dated debt allowing high-quality assets to be levered without unduly increasing risk. The result has seen long-income strategies benefit from relatively secure income and returns over the last twelve months. Looking at real estate sectors, Aviva Investors identified logistics as being the most attractive on a risk-adjusted basis, driven by both cyclical and structural factors.

Chris Urwin, Director of Research, Real Assets, at Aviva Investors, said:

“Long-lease real estate assets let to highly creditworthy counterparties have proven their resilience over the last twelve months. Looking ahead, low capital expenditure and inflation-linked rental growth, makes the sector look attractive. With more investors recognising the attractiveness of long income, we are seeing greater competition for smaller assets. As a result, larger assets could offer relative value in many sectors; for these reasons, we expect long-lease assets to play an important role in real estate portfolios. The pandemic has also focused minds on establishing resilient supply chains and the value of holding inventory. We expect that to last and are very supportive of the logistics sector in the medium to long-term.”

With decarbonisation of buildings an essential component of achieving net zero emissions, one challenge for the real estate industry is that the benefits of these initiatives materialise over longer time periods than typical lease lengths, making it unclear whether landlords will be compensated for such investments. Aviva Investors believes long-income investors are well-placed to tackle this misalignment: due to tenants’ long-term occupation of buildings, they often have more interest in an asset’s sustainability criteria as it reduces their energy costs over time.

Aviva Investors also expects low-carbon assets to continue to deliver value for infrastructure investors, which has been a resilient sector through the pandemic and offers an expanding range of opportunities. It expects better value to be found in more complex areas, with investors holding expert knowledge in these sectors and technologies likely to gain most advantage.

Mark Versey added:

“When we published our first Real Assets House View a year ago, the economic outlook was vastly different to today. As we contend with the changes in economic outlook, our expectation is that ESG factors will increasingly be a key underpinning of long-term performance. With businesses, industries and nations committing to net zero emissions by 2050 or earlier, investing in decarbonisation of the built environment is essential, with real estate markets not yet sufficiently pricing in differentials in buildings’ sustainability credentials. As appetite for real assets grows, we are seeing more clients wishing access to more complex or niche sectors, increasing the importance of specialist knowledge, sophisticated portfolio construction and research-based investment approaches.”

1 Subject to regulatory approval

Real Assets House View 2021

The intelligence that guides our investment decisions 

Find out more

For more information contact:

James Morgan

Media Relations Manager

Steve Ainger

Head of Media Relations

Important information

The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. 

The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as at 08 February 2021. Unless stated otherwise any views, opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature.  The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. 

Issued by Aviva Investors Global Services Limited, registered in England No. 1151805.  Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ   Authorised and regulated by the Financial Conduct Authority.

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £346 billion in assets as at 30 June 2019.


For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/

Aviva is a leading international savings, retirement and insurance business. We exist to be with people when it really matters, throughout their lives – to help them make the most of life. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’.

Our vision is to earn our customers’ trust as the best place to save for the future, navigate retirement and insure what matters most to them. In 2019, we paid £33.2 billion in claims and benefits on behalf of our 33.4 million customers.

We will focus on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. Our International businesses in Europe and Asia will be managed for long-term shareholder value. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience.

Total group assets under management at Aviva group are £522 billion and our Solvency II capital surplus is £12.0 billion (HY20). Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.

For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us

The Aviva newsroom at www.aviva.com/newsroom includes links to our image library, research reports and our news release archive. Sign up to get the latest news from Aviva by email.

You can follow us on Twitter

You can follow us on LinkedIn: www.linkedin.com/company/aviva-plc

For the latest corporate films from around our business, subscribe to our YouTube channel

We have a Globelynx system for broadcast interviews. Please contact the Press Officer noted above if you would like to make a booking.  

Latest company news