A colleague recently asked me if property was considered a HALO asset.
“Hello,” I replied. “What is HALO?”
After an eyeroll (in my defence, the acronym only started infiltrating investment speak in March 2026), I was informed it meant “Heavy Assets, Limited Obsolescence”. In other words, tangible, income-generating assets whose value is less likely to be disrupted by technological innovation, artificial intelligence (AI), digital platforms, or rapid regulatory shifts.
Given the growing anxiety that, with AI now in the mix, investments could be built on sinking sand, HALO is rapidly gaining attention among those investors anxious to find some stable ground.
Property, in general, may be seen as HALO in so much that it is “less likely to be disrupted” than many other sectors (a relative assessment). However, in absolute terms and certainly for some sectors under the property umbrella, this is not always the case. In fact, we believe property’s dynamism is a relative advantage.
Looking for a HALO
Undeveloped land is perhaps the closest that property comes to delivering HALO. It is expensive, near impossible to make more of, and its value would be hard to disrupt (unless we all move to Mars, that is). Of course, land is still subject to regulatory whims, often to its detriment and at the cost of housing availability. Raw land is also rarely what one would term a “Heavy Asset” for investors, as the cost of the top structure or building development normally dwarfs the value of the land, which is the residual.
Built structures could also be subject to significant disruption. For example, despite technological advances construction methods have remained surprisingly unchanged over the decades. Imagine if the way we build were to be disrupted through, for instance by modular buildings, 3D printing or the use of robot bricklayers, and if non-material construction costs were to consequently fall dramatically. This should decrease replacement values while causing the residual land values to go up. Cheaper construction would also mean greater supply, again leading to increased demand for land.
Usagewise, some property segments are notably more HALO-like than others. Examples include residential property in the form of apartments, retirement homes and student accommodation, as well as storage, leisure destinations, medical developments like hospitals and doctor’s rooms, and some technology infrastructure, such as cell phone towers, data centres and fibreoptic cables. Logistic warehouses also fall under the HALO, particularly within specialist areas like cold storage and other industrial uses. Often the HALO attributes are a function of location, for instance tenants who require a location near a port, or of infrastructure shortage – just consider the current headlines around power availability as a data centre constraint.
Retail shopping centres and office space are the less HALO real estate segments that spring to mind. In both cases, however, conditions are currently improving. Certainly, in countries like the UK, where internet shopping penetration is among the most pervasive globally, shopping centre performance metrics are recovering. Little new retail property supply for an extended period and omni-channel retailing have helped shift the dial. Meanwhile, things have also settled into a new norm on the office space front, with a return to the office after Covid-19, albeit not always five days a week. Interestingly, some nodes in technological cities like San Francisco are even experiencing an office boom due to the proliferation of employment by AI companies.
Disruption is never very far away
Despite these green shoots, the potential for disruption should always be front of mind. By way of example, let’s do a thought experiment with a topical local service: express grocery delivery Checkers Sixty60. In a shopping centre, smaller so-called ‘line’ stores typically feed off the natural footfall from the grocery anchor tenants. These anchors pay lower rent because of their pulling power, while line shops are charged higher rentals because of this dynamic. If supermarket visits reduce substantially, the current model could fracture. Right now, rapid ‘last mile’ fulfilment requires physical stores, so a wide store footprint is necessary. However, the injection of a new disruptive service or technology could swiftly see these physical outlets being reduced to ‘dark stores’; which creates a very different rental and design animal (storage vs retail) and potentially new property propositions.
Of course, a distinction should be drawn between specific property subsectors or nodes and the entire dynamic of diversified property as an asset class. A particular subsector or geographic node can decline while others still stand to benefit. You only have to consider the movement of tenants from Johannesburg CBD to Sandton to see that disruption is an inherent characteristic of property, even in the absence of technology. This is because property is subject to what has been termed ‘creative destruction’. While some property segments and nodes become obsolete or unpopular, new ones arise. For instance, logistics fulfilment warehousing was a direct beneficiary of the growth in online retail and came at the expense of store-based retailers. Online also requires physical property to operate, just a different type.
It is ironic that despite the notion that holding unmoving brick and mortar assets is a solid bet, property itself has a tendency towards repurposing. The market will ultimately gravitate to a property’s highest and best use. This means that buildings like office blocks can be creatively repurposed into apartments and new property assets, like data centres, are seeing significant interest. Shopping centres continuously refresh their tenant mix from declining categories to ascending categories, reducing clothing and increasing food and entertainment, for instance. While what was once deemed ‘wasted’ roof or carport space is now a potentially profit-generating solar facility.
Diversity within asset classes
If we take the lesson that disruption works both ways, then this also highlights the advantage of owning a diversified portfolio of property by area and property type. In this respect, South African listed property investors, while better off than those with concentrated direct property portfolios, are not as well positioned as investors in some of the larger markets. We are more heavily skewed towards retail and offices. Sectors like storage, residential, health and housing have a small representation within the JSE, and some sub-segments have no listed exposure. We are not big enough to have the luxury of a plethora of niche property types. However, things can change and, indeed, they have. Industrial is now substantial within JSE-listed property, while offices exposure has shrunk and subsector exposure has increased.
In investment, the big picture is critical. With the concerns underpinning the interest in HALO, the big picture is not the disruption within certain sectors. The big picture is the overall macro-wide implications of the disruption on growth, inflation and employment. If there is an increase in productivity, this could result in strong economic growth, lower inflation, rising living standards and employment in jobs and sectors that, right now, we can’t even begin to imagine. As a result of these big-picture factors, we should see higher property values.
If there are negative impacts, like large-scale job losses or higher interest rates, then real estate prices could fall and even seemingly HALO sectors would lose value. In this case, the HALO would have been nothing more than a smoke ring.
The key takeaway
Many non-property sub-sectors do not have property flexibility; instead, it’s the products and services being produced in these sub-sectors that are currently being disrupted. It is existential. With property, where space is the product, there is usually an alternative usage on the cards, and a cost-benefit analysis will determine the next steps. It’s not an entire product or service market that has just evaporated.
This potential dynamism may be the property sector’s most prominent HALO characteristic compared to some other sectors, but to benefit requires agile, broad and diversified exposure.