Beyond the rate cycle

Global real estate is entering a new era following a significant repricing driven by higher interest rates. While valuations have adjusted, property market fundamentals in many sectors are strengthening, and early signs of a recovery have emerged across global markets. Against this backdrop, investors are increasingly focused on income generation and long-term rental growth rather than relying on falling interest rates to drive returns.

For Swiss institutional investors, global real estate offers access to a significantly broader investment universe and can complement domestic holdings through greater diversification. International markets provide exposure to sectors that are largely unavailable at scale in Switzerland, including logistics and certain specialist residential formats. Many of these sectors continue to be supported by structural trends such as e-commerce growth, demographic change and evolving housing needs.

The sharp rise in financing and construction costs has also slowed new development activity across many markets. As a result, future supply is expected to be more constrained, while tenant demand remains relatively healthy in numerous sectors. This combination is supportive of rental growth prospects, particularly in areas where long-term demand drivers remain intact.

In this environment, real estate is increasingly returning to its traditional role as an income-driven asset class with opportunities for active value creation. Rental income, proactive asset management and the ability to enhance property quality are becoming increasingly important drivers of returns. Many property sectors also retain characteristics that can help support cash flow resilience and provide a degree of inflation protection over time.

At the same time, investing globally requires navigating different markets, regulatory frameworks and currencies. Broad diversification, local market knowledge and careful manager selection are therefore important considerations when building a global real estate allocation. For investors seeking exposure to the asset class, combining specialist local expertise in a diversified portfolio through a multi-manager format may offer an effective way to access opportunities across regions and sectors in a changing market environment.