JLL Sees 'Significant Progress in Impact Investing' on Horizon

Social impact strategies will remain in focus by major institutional investors despite the uncertainty of the coronavirus era, the global head of indirect capital research at JLL said.

“The current crisis is refocusing decision-making on the sustainability of investment opportunities and on building more resilient portfolios to guard against future crises such as climate change,” Gianluca Romano wrote in a trends and insight post.

Romano, noting the substantial financial assistance to bolster economies, predicted many opportunities for “investment strategies that look to build a better future and a sustainable recovery as the world gradually re-opens for business.”

“Significant progress in impact investing is potentially on the cards,” Romano wrote. “If investors can truly see the benefits over the long-term—then one can expect things to accelerate in the coming years.”

JLL’s post pointed to a recent IPE survey that said 1 in 5 real estate investors had continued to make social impact investments during the virus crisis and that about 33% were either planning to make such investments or considering them.

“The investment characteristics of social infrastructure assets are potentially attractive, such as non-cyclical demand, steady income and low correlation to other asset classes,” independent consultant Georg Inderst, said in a post in March at IPE Real Assets. “However, they can also be small and fiddly, rather heterogeneous across sectors, with outputs difficult to measure, and subject to political and renegotiation risks.”

Reid Thomas, chief revenue officer and managing director at NES Financial, told GlobeStreet in March that investors in the post-coronavirus world would look increasingly at social impact investing.

“There is a prominent link to a heightened focus on health and a general bias towards making a positive social impact that this particular issue [COVID-19] is drawing attention to,” Thomas said.

NES Financial recently partnered with Howard W. Buffett and his advisory firm Global Impact LLC. “What we didn’t expect to see is more traditional investment funds start to focus more on how they can adjust to get a better score and how they can tweak their projects to do more good,” Thomas said in the March interview. “Even the traditional funds are starting to think about that as an element of their overall strategy.”

The president and CEO of the Greater Minnesota Housing Fund and Minnesota Equity Fund told Real Assets Adviser in May that affordable housing was a sound investment.

“There is unlimited demand for housing that is more affordable, the waiting lists are long, and it performed better than any other real estate sector during the 2008 recession, which might be prologue to our current economic situation,” Warren Hanson told the publication.

Read more:

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OZ Fund: Social-Impact Investment Interest on the Rise

Turner Impact Capital Focuses on Social Impact, Buys Workforce Housing Community 

Bridge Investment Devotes $619M to Workforce and Affordable Housing