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UBS Asset Management’s Real Estate & Private Markets (REPM) business has been investing in real estate for almost 80 years, having launched its first real estate fund as early as 1943. Since then, the business has grown steadily, expanding the universe and scope of its real estate investments and adopting a truly diversified business model. On an assets under management basis, the business is one of the leading global real estate investment managers today. REPM’s capabilities include core, value -add and, increasingly, opportunistic strategies on a global, regional and country basis. These are offered through open- and closed-end private (unlisted) funds, fund of funds, individually managed (separate) accounts, REITs and publicly traded real estate securities globally. The business actively manages direct investments in the hotel, industrial, multifamily/residential, office and retail real estate sectors, as well as in farmland in the US – a business that specialises in the acquisition, management and disposition of agricultural real estate investments.

Sector forecasts


2022 marked a turning point for the global real estate market as sharp rises in interest rates to combat inflation at multi-decade highs started to feed through. Higher interest rates hit real estate markets from the middle of the year and real estate transaction activity dropped sharply as the market started to re-price. The UK led the correction, suffering significant capital value declines, followed by the rest of Europe, while valuations in the US adjusted more slowly and with a delay. In Japan, real estate capital values have not been subject to the same downward pressure as interest rates there have been kept on hold. The adjustment in the market continued into 2023, with yields continuing to increase and capital values continuing to decline. The banking sector stress in early 2023 saw lending conditions tighten, which impacted debt refinancings and securing debt for new investments. The correction in the market has led to attractive discounted and distressed opportunities for investors looking to deploy capital. We are cautious about the office sector due to the impact of hybrid working and the large capex expenditure needed to make some older offices energy efficient. However, offices used for lab space have been a growing area of interest to investors, with strong fundamental demand from occupiers driving the sector. Residential also has strong long-term prospects due to underlying housing shortages. Following near-term price declines, we think the long-term market dynamics are also positive for industrial and logistics.


Investors may still find an 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 in the face of steady supply. Diversification is important, even within property sectors. Cold storage, a subsector of the industrial sector, appears attractive in the long term as increasing online grocery consumption drives demand for temperature-controlled spaces.


The US housing supply shortage should support multifamily fundamentals even as residential rent growth slows from the fading of pandemic-induced demand. Increasing construction costs will likely lead to several years of slower supply growth. With a narrow spread between yields and the risk-free rate, we expect performance in the sector to be led by income growth. US Government Sponsored Enterprises create a cost-of-debt advantage for multifamily projects compared to commercial mortgage rates. Senior housing fundamentals are recovering from COVID-19 disruptions. We expect continued improvements in sector fundamentals as an ageing population pushes up demand.


Long-term tailwinds continue to favour 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 capitalised 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.

Investment principles & strategy 

Capital market disruption is driving price declines, as income holds up in all major sectors, except Office. Pricing declines could present a good price-point to enter favourable sectors and diversify real estate portfolios.

Performance verification

Source: UBS Asset Management, Real Estate & Private Markets; September 2023. Expected/past performance is not a guarantee for future results.


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