Prior to 2022, real estate investment cycles were shaped less by underlying fundamentals and more by the direction of interest rates. Cap rate compression and abundant liquidity allowed capital to flow into a wide range of sectors, regardless of their operational resilience.
But with the era of cheap debt firmly over, returns now depend much more strongly on the ability to generate inflation-hedging, rental income streams. This has benefitted operational sectors such as living and logistics, where structural fundamentals are strong, particularly in housing, and relatively inelastic demand means rental growth typically rises with inflation. And in recent years, in the United Kingdom, higher mortgage costs, along with the end of the government’s Help-to-Buy programme, and other demand-side schemes, have only increased the diversity of those renting, by reducing the number of people who can enter the owner-occupier market, including in suburban areas — once uncharted territo
