Bill Hughes
Global Head of Real Assets, Legal & General Investment Management, Chair of the Property Industry Alliance
Property investors are contemplating their role in society, making intentional investment decisions to make a positive difference to society and the environment while delivering attractive financial returns.
The real estate landscape and its impact on society is undergoing profound transformation. As we navigate through an era marked by technological advancements, shifting demographics and evolving societal values, the property industry touches many aspects of our society, not merely confined to physical structures and land boundaries.
Instead, it is intertwined with broader notions of social responsibility and collective wellbeing, encompassing a dynamic interplay between individual rights, community interests and global sustainability.
Social impact and property investment
The real estate sector is uniquely placed to consider the impact of investments on society. Investors are prioritising environmental and social criteria, while the physical presence of real estate within communities can directly influence employment opportunities, community development and environmental sustainability.
Bill Hughes, Global Head of Real Assets, Legal & General Investment Management (LGIM), considers their own social impact as “the intentional, additional and attributable economic benefits to communities,” he says.
“The real estate sector is, bar none, the most socially relevant investment sector; its capacity to directly influence society in terms of the built environment itself, consequences for the natural environment and contribution to social equality, is unparalleled.”
Investing in our economy
Poole’s Kingland Crescent was completely revamped as part of LGIM’s strategy to re-invent and re-position its retail offering, with 10 startup and independent Dorset-based businesses offered the opportunity to occupy one of the street’s retail units, free of rent and business rates for two years.
Hughes highlights its impact on the local community. “We wanted to provide an opportunity for local businesses to grow. We now have a thriving street made up of individual businesses, creating around 30 new jobs and increasing footfall into the adjacent Dolphin shopping centre. We have turned this location into a much more relevant real estate investment by making sure that we considered what it is doing for the people who live there.”
The best way to maximise long-term financial results is to create and own assets that are socially relevant.
Working towards a better future
Approximately 10 years ago, the company seized the opportunity to diversify its investment holdings, incorporating social infrastructure. This strategic move has notably enhanced their performance compared to industry peers in recent years.
One of the main issues within the UK is the scarcity of good-quality housing for all. Across its business, Legal & General continues to create additional housing with significant investments in student accommodation, urban and suburban build-to-rent, build-to-sell, residential housing and affordable housing options — creating a range of affordable housing across tenures, including for low-income families and individuals throughout the UK.
Net zero collaboration
Hughes emphasises the importance of reaching net zero carbon emissions. “One of the key considerations, which has changed the game here, is the recognition of businesses having an obligation to do the right thing for the environment, working together to step towards a net zero, carbon-built environment.”
Also Chair of the Property Industry Alliance, an organisation which is deliberately coordinating the efforts of the real estate industry, Hughes is currently setting the agenda to ensure that the real estate industry is prioritising social and environmental considerations throughout.
Return on investment
Not only does the consideration of social impact have positive repercussions for the economy, environmental sustainability, community wellbeing and the promotion of social equity; it also enhances return on investment. Hughes identifies: “The best way to maximise long-term financial results is to create and own assets that are socially relevant.”
Backed by their four key principles, each investment is carefully considered:
(1) Relevance to the community;
(2) Commercial considerations;
(3) Characterised by collaboration;
and (4) Catalytic of good societal impact.
By integrating social impact, investing principles and sustainable property management practices into investment and management approaches, property owners, developers and managers can seek to create positive social and environmental outcomes while continuing to generate attractive financial returns.
