Private Real Estate as an asset class
Newsletter Review | November 2024
Private Real Estate has grown over the last decade into a multi-trillion-euro asset class
Private Real Estate has grown significantly in popularity since its emergence in the 1990s and has since become an institutionalized asset class valued at approximately €3.7 trillion.
Why Private Real Estate?
Attractive risk-adjusted returns
- Stable returns beyond public real estate: Private Real Estate has historically outperformed its public counterpart, enabled by rigorous value creation and asset selection strategies
- Low volatility and steady appreciation: Private Real Estate is a traditionally stable asset class, enabled by appreciating assets with long-term contracts
Fit to macro environment
- Value-adding impact on communities: Investments in Private Real Estate have a sustainable impact on regional and global communities via development of housing and offices
- Growing real estate market: Growth fueled by macroeconomic trends such as population increase, continued urbanization, and digitalization
Downside protection
- Reduced risk of loss: Private Real Estate funds face low downside risks due to a rigorous asset selection processes and appreciating, tangible underlying assets
- Inflation hedge and low stock/bond correlation: Private Real Estate value is linked to inflation rates, reducing inflation risk, while exhibiting low correlation with stocks and bonds
Return drivers of the four main Private Real Estate strategies
Within Private Real Estate, there are four primary investment strategies that offer investors different risk-return profiles and differ when it comes to the two main return drivers: (i)capital appreciation and (ii) income.
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