Real estate values were weakened by swift monetary tightening that hurt valuations and made debt servicing more expensive. (UBS)

Selective fund managers have been able to avoid weaker parts of the market, and excessive investor pessimism has left some valuations looking attractive.


Private real estate investments have faced both economic and structural headwinds in recent years.


  • Real estate values were weakened by swift monetary tightening that hurt valuations and made debt servicing more expensive.
  • Rental incomes on older properties in less appealing locations may not have kept pace with inflation, especially for assets not meeting green building standards.
  • More remote working since the pandemic and the rise of e-commerce hurt weaker parts of the office and retail sectors.

But selective managers have been able to avoid the most challenging areas, focusing on areas of resilience.


  • Although parts of the real estate market have been strained, especially less desirable office space, skilled managers have avoided trouble spots by focusing on location, high-quality and modern assets where vacancy rates are lowest.
  • The continuation of the global rate cutting cycle should also reduce debt servicing burdens and provide a boost to valuations.

So, we see conditions improving, and advise investors on missing out on the likely upturn.


  • We foresee over 3% capital gains and an income return above 4%for global direct real estate in 2024.
  • Investors should focus on quality, including energy-efficient office buildings in prime locations—an area where demand has remained robust.
  • Demand for data centers is also climbing along with the rise in AI.

Did you know?

  • With USD 5.8 trillion in debt, some US commercial real estate investors remain concerned about the risks of potential credit stress, asset write-downs, and reduced liquidity for some private markets managers.
  • In direct real estate we expect transaction volumes to rise from USD 600bn in 2023 to USD 900bn in 2024, indicating a revival in market activity.
  • We estimate that private equity alone is sitting on more than USD 425bn of unlevered dry powder with much of that capital oriented toward distressed, opportunistic, and real estate debt strategies.

Investment view

Given the multi-year investment horizon of the commercial real estate markets, we suggest investors adopt a long-term perspective and be prepared for a potential continuation of short-term volatility in pockets of the market. We favor biasing investments toward high-quality assets with strong fundamentals in growing markets that can withstand an expected gradual deceleration in the US economy as 2024 progresses.


Main contributors - Christopher Swann, Matthew Carter, Thomas Veraguth, Jonathan Woloshin


Original report - Is a rebound in real estate on the way?, 5 June 2024.