Since 2022, real estate equity investment has not looked attractive on a relative (or absolute) basis and for many has lost its purpose, no longer delivering a higher income return than bonds and with values in decline.
However, real estate is cyclical, and whilst some other asset classes, including technology/AI-related stocks, gold and indeed private credit, are showing signs of overheating, the prospects for real estate are improving.
In some real estate sectors, there is both proof of inflation linkage and a deep-seated structural undersupply, despite there being substantial demand. This is especially the case in the UK living sectors, where a lack of development activity is leading to even lower levels of much-needed new supply. This means that rents will continue to grow, and we anticipate that once gilt yields reduce and capital values start to increase, the cycle will turn, and real estate will once again attract greater investment.
In the meantime, we s
