Real estate: The Red Thread – Alternatives

The Middle East conflict has created a new headwind for real estate markets through a higher expected path for interest rates and cuts to economic growth forecasts. Its ultimate impact will depend on its duration and its effect on energy markets. A quicker resolution should see it only dampen the recovery rather than derail it.

Constrained supply and continued diversified occupier demand are underpinning resilient, long-term growth in UK multi-let industrial. The sector offers a compelling case for active management to deliver income-driven outperformance.

Swiss real estate once again proves to be an anchor in a volatile market environment – offering stable income streams and attractive diversification benefits due to its low correlation with other asset classes.

The current energy‑price shock is testing the resilience of real estate markets, introducing a new layer of macro uncertainty, and reinforcing the need for selectivity, diversification, and a focus on more defensive sectors and markets.

We continue to expect a period of modest appreciation while higher-for-longer interest rates persist. In this environment, outperformance will rely less on market beta and more on execution, disciplined asset selection, active management, and operational excellence to drive net operating income growth.

Alpha tends to be associated with decisions that are faster, more consistent and closer to the truth. Data integrity is the prerequisite. That shift underpins how value is now created in real estate.