Recent times have not been good for property. Transactions in once-reliable sectors such as office have slowed to a crawl, faced with a structural shift in use, and many assets have not performed as predicted in a world of higher borrowing costs.

So, investors are faced with a quandary: hold on to underwhelming fund positions or physical assets, with returns eaten away by rising interest rates, or sell when values, rents and deal flow are down.

Charlene Huang, managing director at UBS Asset Management, Real Estate and Private Markets, has been polling investors informally about prospects for their portfolios. While they have held out over the course of this downturn, global allocators are not optimistic that markets will quickly recover.

“They have not really been selling assets in 2023, but the overall sentiment is that 2024 will be a rather underwhelming year as well,” says Huang.

Two types of distress

Stick, or twist? The ti