Private real estate has long played an important role in investor portfolios. ARA Research explores how real estate can offer stable income and downside protection in seasons of economic disruption.

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The Big Picture

• Private real estate has historically been a key building block of investors’ portfolios, offering compelling returns and diversification benefits.
• In periods of elevated uncertainty, exposure to asset classes with predictable, recurring income like real estate can help provide stability.

Reasons for Investing in Real Estate

Pension plans and other institutional investors have incorporated real estate into their portfolio allocations for years as it can provide consistent income returns, greater portfolio diversification, lower volatility, and a hedge against inflation. 

Today, volatility in public markets and elevated uncertainty in the broader macroeconomy warrants a revisiting of the case for real estate given a renewed need for portfolio stabilizers.

Despite accounting for less than 18% of annualized volatility, over 80% of core real estate returns have come from income. 

Lesser average and maximum down years during market downturns can make private real estate an attractive addition to a multi-asset portfolio. 

Investors today are also turning to real estate to protect against inflation. That is because both income and total returns have tended to rise when inflation has, offsetting negative effects in other asset classes. 

Evaluate your plan’s exposure to real estate in your overall portfolio – is now the right time to consider increasing your allocations to this asset class?      

Connect with us if you’d like to learn more.

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Disclaimer

The information in this newsletter is as of March 14, 2025, and is for your informational and educational purposes only, is not intended to be relied on to make any investment decisions, and is neither an offer to sell nor a solicitation of an offer to buy any securities or financial instruments in any jurisdiction. This newsletter expresses the views of the author as of the date indicated and such views are subject to change without notice. The information in this newsletter has been obtained or derived from sources believed by ARA to be reliable but ARA does not represent that this information is accurate or complete and has not independently verified the accuracy or completeness of such information or assumptions on which such information is based. Models used in any analysis may be proprietary, making the results difficult for any third party to reproduce. Past performance of any kind referenced in the information above in connection with any particular strategy should not be taken as an indicator of future results of such strategies. It is important to understand that investments of the type referenced in the information above pose the potential for loss of capital over any time period. This newsletter is proprietary to ARA and may not be copied, reproduced, republished, or posted in whole or in part, in any form and may not be circulated or redelivered to any person without the prior written consent of ARA.

Forward-Looking Statements

This newsletter contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements are statements that do not represent historical facts and are based on our beliefs, assumptions made by us, and information currently available to us. Forward-looking statements in this newsletter are based on our current expectations as of the date of this newsletter, which could change or not materialize as expected. Actual results may differ materially due to a variety of uncertainties and risk factors. Except as required by law, ARA assumes no obligation to update any such forward-looking statements.