For someone in his position BIll Hughes makes a very obvious error. Looking at the yield from rented housing means looking much more braodly that at the initial yield. Rents rise with inflation + 0.5% in the social sector and at the rate of average earlings increase in the PRS. thus the fact that most schemes only make an initial 2.8-3.5% on first letting is irrelevant.
The income stream is index-linked plus, so why are investors talking about flat initial yields as it this were a bond? What Mr Hughes needs to compare it with is the return L&G are getting on their index linked Gilts- rents are ultimately underwritten by HB so the parallels with an index linked Gilt are highly persuasive.
IN investment terms social housing is an oddity and many investment professionals struggle to get their heads round it, it does not behave like a bond ,, though its close to an index-linked bond, and it does not behave like conventional commercial property, which is much more specualtive in nature.
Furthermore it does not hold out the promise of generating ongoing fees for the fund's "investment advisers" as it is very much a "buy and hold" type of investment. MOre attentioin on fund performance from the pension fund regualtor could be what is needed to move this up the agenda of the funds who need steady but growing incomes for the pensioners who rely on them.