UBS Asset Management’s Real Estate & Private Markets (REPM) business has been investing in real estate for over 75 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, multi-family/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

Industrial: Investors may still find upside by adding industrial exposure. Supply chain disruptions and logistics challenges were no match for sustained customer demand in 2020. Income is holding up. Growing investor appetite should reinforce good performance, while tenant demand is supported by accelerating online ordering and increasing inventory build-up. Cap rate compression plus income growth should lead to another year of industrial out-performance relative to other sectors. We like the flexibility that comes with industrial’s low capex requirements. In fact, for strategies like infill renovation, cold storage and flex, a little more capital spending may be warranted to stay competitive. 

Office: A substantial drop in office rents is not priced in right now, but there is downward pressure. Values will likely adjust downward when more leases are signed and allow comparisons to current assumptions. Opportunities in the office sector will be very specific to individual deals. Capex is likely to continue to weigh down cash yields post-pandemic. In 2021, look for value in post-renovation assets with a focus on improving the portfolio’s sustainability profile. Firms will still need office space, even if the rise of flexible ways of working lowers demand potential somewhat over the long term. We are more optimistic about the urban edge than the traditional urban core. Yet, all suburban locations are not equal. Despite the need for space and fresh air, locations closer to density remain more attractive.

Retail: Demand doesn’t look good. Even when landlords find strong tenants, they will likely negotiate significant concessions. Fewer small businesses are opening, and credit risk remains high. We expect 2021 to be the fourth year of retail depreciation. The situation looks dire, and retail transactions are low, but don’t count retail out forever. The sector already offers the widest spreads, and often occupies valuable locations. As recovery begins to take hold, retail should benefit from pent-up consumer demand for goods, entertainment and food. When experienced investors have better clarity on competitive leasing terms, it may be possible to find attractive spreads, but be wary of future capital needs.

Global: The COVID-19 pandemic has had a significant impact on the global real estate market. Real estate values showed a small decline over 2020 as a whole, but held up well given the magnitude of the economic downturn. The market has been supported by swift and sizeable intervention by central banks and governments. The rotation online across the economy has affected most parts of the real estate market. Bricks and mortar retail has suffered as online shopping has been further turbo-charged, while demand for the logistics facilities needed to fulfil online shopping orders has increased. Offices have been impacted by the switch to mass home working and we expect this to continue to have an impact even once the pandemic has passed. Construction has been constrained and broadly the supply-side response has been muted this cycle, particularly in Europe.

There was a significant drop in real estate transaction volumes in 2020, due to uncertainty over pricing and as travel restrictions and social distancing requirements impinged on the transaction process. However, in 2021 transaction activity has recovered as economies have re-opened. In the first half of the year real estate markets showed a strong, albeit highly polarised, performance driven by the industrial sector. The resilient appeal of global real estate remains, driven by a number of factors: ongoing low bond yields; the hunt for steady income; the importance of asset diversification; and a need for stability. Income returns tend to be quite stable over time, both within and across markets, while capital growth can vary tremendously depending on a market’s stage in the cycle. Global real estate remains attractive relative to other asset classes in the sustained low-rate environment and provides the income and low volatility which many investors desire. Lower leverage and less exuberant pricing for lower quality real estate also means the asset class is less at risk than in the last cycle.

Performance verification

Source: UBS Asset Management, Real Estate & Private Markets; June 2021. Past performance is not a guide to future performance.


This publication is not to be construed as a solicitation of an offer to buy or sell any securities or other financial instruments relating to UBS AG or its affiliates in Switzerland, the United States or any other jurisdiction. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions contained in this document have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith but no responsibility is accepted for any errors or omissions. All such information and opinions are subject to change without notice. Please note that past performance is not a guide to the future. With investment in real estate (via direct investment, closed- or open-end funds) the underlying assets are illiquid, and valuation is a matter of judgment by a valuer. The value of investments and the income from them may go down as well as up and investors may not get back the original amount invested. Any market or investment views expressed are not intended to be investment research. The document has not been prepared in line with the requirements of any jurisdiction designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this document does not constitute a distribution, nor should it be considered a recommendation to purchase or sell any particular security or fund. A number of the comments in this document are considered forward-looking statements. Actual future results, however, may vary materially. The opinions expressed are a reflection of UBS Asset Management’s best judgment at the time this document is compiled and any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise is disclaimed. Furthermore, these views are not intended to predict or guarantee the future performance of any individual security, asset class, markets generally, nor are they intended to predict the future performance of any UBS Asset Management account, portfolio or fund. Source for all data/charts, if not stated otherwise: UBS Asset Management, Real Estate & Private Markets. The views expressed are as of June 2021 and are a general guide to the views of UBS Asset Management, Real Estate & Private Markets. All information as at June 2021 unless stated otherwise. Published September 2021. Approved for global use.