UBS Asset Management’s Real Estate & Private Markets (REPM) business has been investing in real estate for over 80 years, having launched its first real estate fund as early as 1943.
REPM actively manages investments of around USD 178 billion* globally and regionally within Asia Pacific, Europe and the US, making it one of the largest asset managers in real assets worldwide. Our capabilities reach across the risk / return spectrum, ranging from core to value-add and opportunistic strategies. We offer direct real estate, infrastructure equity and debt, and food & agriculture investments as well as indirect exposure to leading real estate, infrastructure, private equity and private credit managers. Investors can access our diverse product range across open- and closed-ended private funds, investment trusts, listed funds, REITs and bespoke separately managed accounts.
* Asset under management stated on gross asset values basis and includes CS, reflecting values as at 31 December 2023, where available. * Data includes commitments.
Sector forecasts
GLOBAL:
Global real estate performance in 2023 was set against a weak economic backdrop of prolonged high inflation, sharp rises in interest rates and looming fears of recession. As interest rates looked to be peaking, they were having their desired impact of curbing inflation from multi-decade highs. Throughout 2023, global real estate transaction activity remained subdued as the miss-match in price expectations between buyers and sellers and uncertainty over the outlook continued to hold back deals. In the first half of 2024, according to MSCI, investment volumes remained well below their post-pandemic peak, and capital values showed some further declines. We think that the bulk of the correction in capital values had occurred on entering 2024 and that performance will improve in the second half of the year as interest rates get cut and start to feed through to property markets, and they begin to normalize. We are most cautious on offices, which are seeing a strong bifurcation in terms of quality and location as the shift towards hybrid working sees ongoing structural change in the market. Sectors that look set to outperform include life sciences and data centers, due to strong fundamental occupier demand, as well as hotels and hospitality, benefitting from wider travel activity in the wake of the pandemic and despite rising costs, and are also set to benefit from growth in the economy.
INDUSTRIAL / LOGISTICS / COLD STORAGE:
Investors may still find upside by adding industrial exposure, though increasing debt cost and compressing cap rates have put more focus on rental growth expectations. The industrial sector powered through sustained supply chain bottlenecks and economic headwinds, posting solid demand which has kept pace with supply. Within the industrial umbrella, cold storage fundamentals are proving more resilient to inflation than initially projected. The long-term outlook for the sector remains strong, as increasing online grocery consumption drives demand for temperature-controlled spaces.
LIFE SCIENCES:
Long-term tailwinds continue to favor the life sciences sector, but current market conditions might cause temporary disruptions. Economic uncertainties have weighed on venture capital funding, which decelerated from record levels in 2021. A pullback in funding will primarily impact smaller and less capitalized biotechnology companies. We expect major life sciences clusters with tight market conditions, such as Boston/Cambridge, San Francisco, and San Diego, to remain resilient amid near term headwinds.
MULTIFAMILY:
US multifamily is experiencing a high rate of new supply growth, which has weakened rent growth and pushed up vacancy. Construction levels should ease in 2025, and long term, a housing supply shortage supports fundamentals. Senior housing fundamentals are recovering from COVID-19 disruptions. We expect continued improvements in sector fundamentals as an aging population pushes demand.
COMPLIANCE STATEMENT
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