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Andrew Sangster, co-founder of the European Serviced Living Investor Network, argues that value in real estate is increasingly driven by operational excellence, not simply the asset itself.
A curious thing happened at UKREiiF this year. Panels discussing housing, hostels, hotels, coastal regeneration, artificial intelligence and later living appeared to be addressing entirely different issues. Housing experts debated affordability and demographics. Hospitality operators discussed customer experience. Local authorities talked about regeneration. Technology specialists argued about AI. Yet beneath the surface, many of these conversations were circling around the same underlying question: where does value come from in real estate today?
For much of the past two decades, the industry’s answer would have been straightforward. Value came from location, planning, development, capital markets and asset management. The building was the centre of the investment case. Occupiers mattered, but often as a means of supporting the value of the real estate rather than as a source of value in their own right.
Several of the discussions in Leeds suggested that balance is changing.
The housing sessions provided perhaps the clearest example. Much of the public debate remains focused on supply, planning reform and housebuilding targets. Yet speakers repeatedly returned to a different issue. Richard Donnell of Zoopla noted that the overwhelming majority of future household growth is expected to come from single-person households aged over 60. The challenge is therefore not simply one of quantity. It is whether the market is producing the right housing for a population that is becoming older, smaller and increasingly diverse in its needs. The question shifts from how many homes are built to who they are built for and how well they meet changing patterns of demand.
A similar theme emerged in hospitality. At a Christie & Co panel, operators described businesses that are increasingly differentiated by what they do rather than where they are. Chester Zoo abandoned plans for a conventional hotel in favour of accommodation integrated into the wider visitor experience. Radisson discussed finding new uses for hotel space throughout the day. A&O Hostels talked about designing rooms and communal areas that can serve multiple customer groups. These businesses are still dependent on location, but location is no longer enough on its own. The competitive advantage increasingly comes from understanding customers, managing demand and creating experiences that are difficult to replicate.
That same logic is beginning to appear across the wider living sectors. Student housing, build-to-rent, coliving and later living remain distinct markets, but investors are increasingly asking similar questions of all of them. How affordable is the product? How effectively is it managed? Why do customers choose it over alternatives? How resilient is occupancy? How strong is the service proposition? The discussion is becoming less about the asset category and more about the quality of the operating platform behind it.
Even the artificial intelligence debate pointed in the same direction. The most striking conclusion from that session was not that AI will transform real estate, but that its impact may depend largely on the quality of the underlying business. Organisations with poor data, weak processes and fragmented systems are unlikely to become more effective simply by deploying new technology. If anything, AI may expose existing weaknesses more quickly. As one speaker suggested, the technology acts less like a miracle cure and more like a mirror.
These themes sit at the heart of the forthcoming Operational Real Estate Summit, taking place in London on 23rd June. While operational real estate is often divided into separate sectors such as student housing, build-to-rent, later living, hospitality, self-storage and flex office, the conversations at UKREiiF suggested that investors are increasingly confronting a common set of challenges. Demographic change, affordability pressures, operational intensity, technology, staffing and customer expectations are beginning to shape performance across every sector. The traditional boundaries between asset classes remain relevant, but they may be becoming less important than the ability to operate them successfully. Further details of the event can be found here.
Taken together, the discussions in Leeds hint at a broader shift. For many years, the industry’s edge came from access to information. Investors sought superior market intelligence, planning insight or transaction knowledge. Those advantages remain important, but they are becoming harder to defend in a world where data is increasingly abundant and analytical tools are available to almost everyone.
The more durable source of advantage may lie elsewhere. It may lie in judgement, execution and organisational capability. Can a business recruit and retain the right people? Can it create a service proposition that customers genuinely value? Can it adapt to changing demand, manage costs effectively and deliver a consistently high-quality experience? These are questions that hospitality operators have wrestled with for decades. Increasingly, they are becoming central to the investment case across much of operational real estate.
Perhaps that is why so many apparently unrelated discussions at UKREiiF felt connected. A hostel operator, a build-to-rent platform, a later living provider and a coastal regeneration partnership may have little in common at first glance. Yet all are ultimately trying to solve the same problem: how to create enduring value by understanding the people who use their assets.
The buildings still matter. They always will. But one of the clearest messages to emerge from Leeds was that investors are paying much closer attention to the businesses that sit inside them. The next phase of real estate investment may not be about identifying the best buildings. It may be about identifying the best operators.
