Real estate: The Red Thread – Alternatives

Global real estate investment volumes bounced back in the third quarter after slipping in the first half of the year, as investors held back due to concerns over tariffs. Returns were positive over the quarter in the US and UK markets, with capital values holding up. Debt costs vary by market, so investors should use debt selectively, targeting markets such as those in Europe where debt is accretive to returns. In markets where debt costs are higher, investors should pursue higher-return strategies to justify its use or focus on strong asset management, such as reducing vacancy and increasing rents to drive performance. We expect both transaction activity and performance to pick up further in 2026.

In times of uncertainty, investors seek safe havens. As real estate income is generated domestically and therefore less affected by trade policy disputes, the popularity of direct Swiss real estate, already traditionally regarded as a ‘safe haven’, continues to grow. Strong market fundamentals in Switzerland further underpin the strength of the asset class. In particular, the residential market is continuously characterized by high demand – driven by strong net migration – while supply remains scarce.

The Swiss real estate capital market has shown strong momentum in 2025, with significant inflows into both listed and non-listed real estate funds. Demand for residential real estate funds remains high, driving their performance and widening the yield gap with commercial funds. Listed real estate investments have delivered above-average returns this year, with indices reaching new highs. Premiums have also increased, reflecting strong investor confidence. Seasonal trends point to the potential for continued positive performance through the end of the year.

APAC real estate markets have demonstrated resilience amid ongoing trade uncertainties, with recent US-China tariff postponements and regional trade deals providing some stability. Japan and Australia have shown relative strength, with Japan’s office and residential sectors performing well and Australia showing early signs of recovery in prime locations. Despite lingering volatility, a selective and diversified investment approach remains crucial in navigating the region’s evolving economic landscape.​

US commercial real estate values are hovering near the trough, presenting investors with an opportunity to capitalize on early-cycle returns. However, ongoing market uncertainty may prolong a full recovery in capital returns. In the near-term, investors should focus on assets with reliable net operating income and strong leasing fundamentals. These will be in sectors with favorable structural tailwinds and located in strategic, high-growth markets with limited supply risk.