As we look at the market today, one thing is clear: Volatility and geopolitical noise loom large, according to a recent report by PGIM’s Real Estate Business. But the biggest risk we see for real estate is sitting on the sidelines.
There will never be a risk-free moment. This is precisely why high-quality real estate matters more in portfolios in this environment. It can provide durable income, income growth and a stabilizing anchor when day-to-day public market volatility is elevated.
In other parts of the financial market — including equities — today’s elevated price-to-earnings ratios leave little room for error and create a risk to future returns. Real estate is in a different place. After a sharp correction and a slow, uneven recovery so far, we see today’s lower values as setting up a meaningful tailwind for returns in the years ahead.
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