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Where to? Recession and the road map for listed and private real estate
Real estate is being repriced as investors come to grips with a new cost of capital and slowing growth. We see the economic regime shift creating the potential for strong vintage returns.
The turning of the economic cycle to a decelerating growth or contracted environment, higher financing costs and tighter availability of financing are shifting the private and listed real estate landscape under our feet.
The result, at the time of writing, is that listed real estate performance in 2022 has been weighed down by real estate investors’ increased expectations for returns. REITs, as measured by FTSE Nareit All Equity REITs Index, were down 25.5 percent through Oct. 31, 2022. This decline is comparable to what we’ve seen from REITs historically in recessionary periods.
At the same time, the private real estate markets have not yet repriced to reflect market weakness, but we expect private values to also decline. Private real estate typically lags listed real esta