Repricing and opportunity in real estate

Real estate markets have experienced a significant correction in recent years, with global valuations falling between 16% and 21% depending on the region.

This adjustment, while initially dampening sentiment, has reset the market and created more attractive entry points. Alongside a widespread supply crunch, particularly in sectors like logistics and residential, this repricing is now underpinning rental growth and setting the stage for stronger return prospects.

The potential and the pitfalls

Despite geopolitical and economic uncertainty, real estate is once again being recognised for its portfolio benefits, including income generation and low correlation with public markets.

At the same time, infrastructure is becoming an area of increased interest, especially in Europe where there is a growing realisation that governments will need to significantly invest in their energy security. Doing so, however, will depend greatly on private capital to bridge the funding gap. Opportunities are pronounced in renewable energy, where Europe alone is estimated to require €850 billion in investment, as well as in digital infrastructure, including data centres, wireless towers and fibre optic networks.

The private sectors role is not only financial but also strategic, with firms deploying balance sheet capital to catalyse opportunities that can later be scaled for institutional and wealth clients.

The alignment of long-term structural demand, policy support, and technological transition presents a compelling case for infrastructure investment.

However, while the opportunity set for real assets is significant, one key point raised by industry executives at IMpower FundForum was the tension between liquidity and investment efficacy.

Senior Director, global real estate investment management group.

"Investors come more from a bond or security world where there's plenty of information, which is not necessarily true for private assets. This is where the gap needs to be filled to provide more comfort and better manage expectations."

Infrastructure investments offer stability during market fluctuations, with cash flows characterised by long-term visibility and direct inflation correlation. Limited options in listed markets and government funding constraints have boosted private capital investment, opening pathways for operational improvements in complex infrastructures.

One of the most underrated characteristics of investing is duration and compounding. Infrastructure ticks this box, providing cash flow stability through cycles. Over the years, the asset class has shown lower volatility (5%) compared to equities (18% MSCI) and bonds, underscoring its resilience during recessionary periods.

Most investors, whether institutional or wealth-focused, operate within a defined liquidity budget. As a result, product innovation needs to align with these parameters. Hybrid structures that blend listed and unlisted assets, and integrate revolving credit facilities, are gaining traction. These designs aim to deliver a better balance of liquidity, diversification, and return potential while respecting the risk profile of private markets.