Private Real Estate Offers Resilient Income

Private real estate investments can provide resilient income, diversification and long-term value creation, according to MA Financial joint CEO Julian Biggins. He said investors combining patient capital with operational excellence are best positioned to capture the opportunities ahead.

Differentiated Returns

Private real estate can provide a differentiated return profile compared with listed real estate. This asset class typically shows lower correlation to listed equities and reduced exposure to short-term market sentiment, which supports portfolio resilience during periods of volatility.

“Private real estate offers a differentiated return profile that can enhance portfolio resilience over the long term,” Biggins said.

The wider alternatives industry has grown rapidly as investors seek diversification away from traditional equities and bonds. According to State Street’s 2026 private markets study, private markets demand remains strikingly resilient in the face of challenging macroeconomic and market conditions.

“Against this challenging global backdrop, the demand for illiquid assets remains notably resilient in our latest survey,” the report stated. “Just 7 per cent of asset owner respondents plan to reduce their exposure to private markets over the next two years, while exactly half intend to grow their allocations.”

State Street said approaches vary by sub-asset class, with private equity remaining the most favoured strategy, followed by private credit, and infrastructure and real estate.

While traditional real estate sectors such as office, retail and logistics remain important components of institutional portfolios, they are also among the most mature and competitive. Increasingly, the most compelling opportunities are emerging in sectors that are still undergoing institutionalisation. These include hospitality assets, marinas and specialist disability accommodation, alongside accommodation hotels, land lease communities, childcare and aged care.

“As these sectors mature and institutional capital participation increases, investors who establish exposure early have the potential to benefit from both growing income streams and capital appreciation,” Biggins said.

It is notable that less institutionalised sectors of the real estate market—where structural demand, fragmented ownership and operational complexity exist—often represent attractive opportunities for experienced managers. In contrast, the most competitive sectors are usually the ones that have already attracted significant capital and institutional participation.

Interest Rates and Entry Points

Operational capability is becoming increasingly important as returns become less reliant on interest rate movements and more dependent on improving asset performance, enhancing customer experiences and growing underlying cash flows. Managers with integrated operational capabilities are therefore better positioned to identify opportunities, drive performance improvements and create long-term value than those whose expertise is primarily financial.

The importance of entry price was also a key focus. Biggins highlighted that current market conditions had created opportunities to acquire high-quality assets at prices below replacement cost. “Entry price remains one of the most important determinants of long-term investment performance,” Biggins said.

Higher interest rates, subdued transaction activity, raised construction costs and constrained development activity have contributed to pricing disconnects. Meanwhile, limited new supply could support occupancy, rental growth and asset values over the medium to long term.

“We believe investors who can deploy capital selectively in the current environment have an opportunity to secure attractive entry points and generate compelling long-term risk-adjusted returns as markets normalise,” Biggins said.