Rethinking real estate: Navigating market uncertainty and the changing operating landscape by reconsidering the real estate frame of reference
The global macroeconomic landscape has changed significantly in a few short years. COVID-19 caused an economic shock that continues to reverberate around the world, but the pandemic also placed significant pressure on pre-existing geopolitical tensions, boiling over most visibly in the Ukraine conflict. Meanwhile, real estate investments have become increasingly diversified over the past 10 years, with the almost 500 percent growth in transactions coming from increasingly operationally exposed subsectors.
The result is a need for a more nuanced framework to analyze real estate assets. Furthermore, a structure built on the fundamental utilization of the space, rather than the traditional real estate asset class, enables investors to better understand the underlying risk exposures within a portfolio, and drive greater diversification.
The limitations of traditional real estate thinking
Depending on which region we look at, institutional real estat