Investors should be aware that infrastructure investments are typically long term and subject to illiquidity and longer breakeven periods than other private markets. (UBS)

Lower interest rates in 2024 may offer some relief to the sector. But selectivity will remain key, given debt and demand challenges. We like select opportunities in areas linked to long-term trends such as digitalization and decarbonization.


Private real assets faced some challenges in 2023.


  • Higher borrowing costs hurt performance of some private real asset strategies last year, given that many rely on debt to build and maintain assets.
  • Global direct real estate investment stood at around USD 200bn in the first half of 2023 according to JLL, far slower than the USD 1,200bn for full year 2021.
  • The office sector faced particular problems with loan losses and lower demand for old assets.

Lower interest rates this year may help private infrastructure and real estate.


  • Looser financial conditions and lower interest rates could provide better capital appreciation prospects in 2024.
  • While we do expect global growth to moderate this year, we also see scope for select rental income growth in real assets.
  • However, we favor a selective approach to private real assets, focused on quality assets with a good longer-term outlook.

Digitalization and broader AI use favor exposure to data center assets.


  • The digital data universe is expected to grow more than sevenfold between 2020 and 2030, according to IDC, EMC, and Bloomberg Intelligence.
  • Demand exceeds supply for hyperscale data centers—which house computer and infrastructure for cloud computing providers—with a 3% vacancy rate in 2022, according to ULI/pwc.
  • We have a most preferred view on data center assets in the US, UK, mainland China, and Singapore in our global real estate strategy.

Did you Know ?


  • The hyperscale market is the fastest-growing part of the global data center sector, with a 5-year compound annual growth rate of 22.6% according to the Structure Research Global Colocation Report (February 2023).
  • Emerging Asia needs to invest USD 1.7tr in infrastructure each year from 2016 to 2030 to remain competitive, according to the Asian Development Bank.

Investment view


We are selective on the real estate market, maintaining a focus on quality and resilience. Fundamentals in the industrial, logistics, and multifamily sectors are sound, in our view, supported by favorable trends such as e-commerce and demographics. Infrastructure can help investors grow their wealth, diversify portfolio returns, and better match long term liabilities to assets. We see value in well-diversified private market vehicles. Investors should be aware that infrastructure investments are typically long term and subject to illiquidity and longer breakeven periods than other private markets.


Main contributors - Matthew Carter, Christopher Swann, Thomas Veraguth, Antoinette Zuidweg


Original report - Will rate cuts revitalize private real assets?, 9 January 2024.