The Future of Global Real Assets: GRI Global Capital Connectors 2026 Spotlight

► Real Assets and Shifting Mandates

Key Questions Facing Real Assets

As the real estate industry faces a period of intense volatility, two fundamental questions frame the current scenario and outlook: how is long-term capital repositioning itself, and who possesses the conviction to actively deploy capital in today's constrained environment? 

The prevailing consensus points toward a cautiously optimistic outlook, heavily characterised by a K-shaped recovery and a bifurcated landscape in which certain asset classes and geographical hubs - notably London, New York, and Tokyo - are beginning to see the light at the end of the tunnel, while other traditional sectors remain fundamentally challenged. 

With interest rates having presently stabilised from their precipitous climbs and inflation acting as an ever-present consideration, the strategic reallocation of global capital is undergoing a dramatic transformation.

Macroeconomic Realities 

From the perspective of global institutional investment management, the current reality is stark: real estate must work considerably harder to justify its position within diversified portfolios. 

The era of easy monetary policy is firmly in the rearview mirror, replaced by a higher-for-longer interest rate paradigm - not to mention the potential increases if the US-Iran conflict and energy price surge continues. 

Global real estate values fell by roughly 25% in response to rising interest rates - a much steeper correction than seen in other asset classes - yet these valuations have surprisingly not recovered as rates declined to their current levels. 

In this environment, relying on broad market beta is no longer a viable strategy for generating acceptable returns, and the fixed income universe - which now offers highly attractive yields across a vast majority of its spectrum - has become a formidable competitor for core capital. 

The Battle for Core Capital

Many market participants are aggressively hunting for the elusive buyer who is willing to accept 8% returns on real estate, a challenging prospect when 80% of the fixed income universe arguably presents a more compelling risk-adjusted profile. 

This heightened competition has led to a noticeable under-allocation to real estate, even among major, traditionally heavily weighted pension funds in the US. 

The structural system of capital flow appears temporarily stalled; the market desperately requires an injection of core capital to lubricate transaction volumes and establish pricing floors, yet this capital remains highly selective, heavily scrutinised, and frequently on pause.

Furthermore, global geopolitical volatility, including ongoing conflicts, has introduced an in-built layer of concern for allocators. Risks are no longer viewed in isolation; they hunt in packs, compounding one another and delaying the broader repricing recovery that many anticipated would follow the initial market corrections. 

Despite this, there is a vast reservoir of dry powder waiting on the sidelines, preventing the immediate democratisation of the sector but signalling that equity is available for the right opportunities.

Fund Management Shifts and Wealth Democratisation

There is mounting dissatisfaction with the traditional closed-ended fund model, which has dominated the industry for over three decades. The inherent inefficiencies of the J-curve, the start-and-stop nature of capital deployment, and the severe lack of liquidity during down cycles are prompting a structural review.

In response, there is a pronounced pivot towards evergreen, semi-liquid structures, explicitly designed to capture the growing appetite within private wealth management. As institutional investors and pension funds exercise caution and often utilise leverage, individual wealth is emerging as a critical source of fresh capital. 

However, this demographic requires different solutions, prioritising liquidity and transparency alongside target returns often exceeding 10% - a combination that is notoriously difficult to achieve. To facilitate this, the industry is increasingly looking towards technological automation and tokenisation to streamline access and provide corporate solutions.

Simultaneously, the manager landscape is experiencing a wave of consolidation. While open and closed funds will persist, allocators are witnessing a reshuffling of limited partner preferences. 

Raising seed capital and achieving the scale necessary to exit the J-curve has become incredibly difficult for emerging managers. While general partner consolidation offers scale, allocators caution that it may not always serve the best interests of limited partners, who frequently rely on nimble, highly specialised operators - sharpshooters - to target niche value-add and opportunistic returns. 

Co-investing and secondary markets are also surging in popularity, providing essential liquidity and transparent entry points for pooled investors.

Sectoral Repositioning and Megatrends

Capital deployment is no longer sector-agnostic; it is intrinsically tied to global megatrends. From the viewpoint of large-scale operators and asset managers, there has been a definitive, structural shift in allocations. 

Traditional office and retail spaces have seen their portfolio weighting reduced significantly, often by 10% or more, to make way for sectors with undeniable demographic and technological tailwinds.

Logistics, data centres, and the broader residential living sector - encompassing build-to-rent, multifamily, and purpose-built student accommodation (PBSA) - are the clear beneficiaries, seeing allocation increases of 5-8%. These sectors offer a robust hedge against inflation, a critical consideration for today's investors. 

In many residential markets, particularly where there is a pronounced housing shortage, income growth is significantly outpacing inflation, registering at 7-10%. 

European open-ended funds are actively building subscriptions based on this momentum, targeting yields around 8% and proving that debt markets are functioning efficiently to support these acquisitions.

Despite the broader caution, operators with a long-term outlook of ten years or more are actively bargain hunting. The current market is presenting historically wide spreads, particularly in the battered office sector, allowing value-add and opportunistic capital to acquire assets at highly attractive entry points. 

For those who are equity-rich, this is widely considered one of the best deployment vintages in recent history.

The Interplay of Debt and Equity

The dynamics between real estate debt and equity remain a subject of intense debate among global allocators. From a multi-manager standpoint, the real estate debt narrative is exceptionally strong. 

Debt strategies currently boast robust buffers - with back-leverage frequently sitting at less than half of underwritten loans - and are functioning efficiently across Europe, Australia, and the US. 

With traditional banking institutions pulling back and alternative credit providers stepping in, there is a substantial runway for debt deployment. However, institutional equity managers argue that while debt appears attractive on a risk-adjusted basis, pure equity remains the superior long-term play. 

The conviction is that global megatrends will ultimately drive exponential equity returns that debt instruments simply cannot match. 

Allocators also express significant reservations regarding the risks associated with back-leverage in certain debt products. 

It is noted that in previous market corrections, such as the period following the Global Financial Crisis (GFC), debt markets rebounded much faster than equity. However, this current cycle began with a higher availability of credit, leading to questions about whether sufficient debt remains to fuel a full recovery. 

Ultimately, while debt undoubtedly provides vital portfolio diversification in a sideways market, equity investments are deemed more compelling for capturing the upside of the emerging new cycle.

Global Geographic Strategies

Geographical allocations are becoming increasingly surgical, reflecting the divergent monetary policies and economic realities of different regions.

United States

The US remains the undisputed heavyweight of global real estate liquidity. Allocators suggest that a balanced global portfolio should maintain a 50-60% weighting in the US market. 

The multifamily sector continues to be a massive draw to many investors, bolstered by deep capital availability and long-term demographic growth that neutralises short-term supply issues over a one-to-two-year horizon. 

Interestingly, international capital is expanding its focus beyond the traditional prime cities such as NYC and Los Angeles, seeking higher yields in rapidly growing smaller markets including Austin, Nashville, and Charlotte. 

While the US market appears to have hit bottom approximately six months ago and is now experiencing upward pricing pressure, investors are heavily cautioned to monitor currency volatility when deploying international capital.

Europe and the UK

In Europe and the UK, the repricing cycle has followed different trajectories. The UK market corrected faster, offering more immediate clarity, while continental Europe has been slower to adjust. 

Nevertheless, Europe is currently presenting exceptional buying opportunities for core and value-add capital, particularly in logistics, residential, data centres, and hospitality assets. 

While broader economic growth in Europe remains sluggish, specific sub-markets such as Spain and Portugal are exhibiting strong economic resilience.

► Join the region’s top leaders at Europe GRI 2026 - Summer Edition in Paris on 9th-10th September

APAC

The Asia-Pacific (APAC) region presents a mixed landscape, with mature, developed markets highly favoured for equity deployment. Japan continues to attract significant interest due to its exceptionally low interest rate environment, though investors remain watchful of central bank policy shifts. 

Australia and Singapore remain highly liquid mainstays for core capital, benefiting from strong domestic capital pools and lower reliance on international funding. 

Liquidity in South Korea is also trending upwards, while broader APAC investors are sitting on substantial pools of core and core-plus capital, albeit with return expectations that may currently be slightly misaligned with realistic market outputs. 

Conversely, pricing transparency in China remains a significant hurdle, while India is viewed as a high-momentum wildcard - a market strictly for the brave, as many international investors still don’t consider the country to have demonstrated a consistent, repeatable cycle of institutional returns outside specific sectors.

► If you’re feeling brave, don’t miss India GRI 2026 on 8th October in Mumbai

The Future of Real Asset Allocations

Despite the myriad challenges, the long-term institutional commitment to real estate remains intact. 

No major allocators are drastically slashing their overall real estate targets, although the immediate volume of transactions may temporarily decrease as capital flows into credit, infrastructure, and alternative sectors including MENA investments or niche operational real estate such as self-storage and even car washes. 

Notably, sovereign wealth influence remains a powerful driver; for instance, outlier entities are actively seeking to increase their real estate exposure significantly - such as moving from a 3% to a 7% allocation of a trillion-dollar portfolio - signalling deep underlying confidence in the asset class.

The overarching sentiment for navigating this complex landscape is encapsulated in the classic adage to keep calm and carry on. 

While predicting the exact bottom of the market and knowing precisely when to halt allocations remains an elusive goal, the current environment offers unparalleled opportunities for those equipped with the right capital structures, a deep understanding of structural megatrends, and the patience to weather ongoing geopolitical volatility.
 

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► The Cost of Conviction

Pursuing Value in a Complex Era

Despite the overwhelming macro hesitations that dominate industry headlines, the overarching sentiment among these highly capitalised players is not one of retreat, but of aggressive, calculated action. 

For allocators armed with conviction, the current environment presents a compelling vintage. When broader market participants back away out of fear, those with long-term mandates and zero reliance on traditional debt are stepping forward, actively closing deals, and leaning into the volatility.

Redefining Real Estate and Infrastructure

One of the most consequential themes defining the current cycle is the increasingly blurred line between traditional real estate and infrastructure. 

As global economies lean heavily into the energy transition and digital transformation, the strict categorisation of assets is breaking down. Infrastructure strategies are heavily focused on mobile towers, fibre optic networks, and the insatiable demand for data centres.

For institutional infrastructure investors, the distinction lies in the underlying economics rather than the physical structure. 

While site aggregation for a wind farm, solar array, or electric vehicle charging station may look fundamentally like a real estate transaction, the value is derived from long-term operator contracts rather than traditional leasing dynamics. 

Consequently, core infrastructure return expectations have adjusted upwards by 150 to 200 basis points, with core assets now targeting 10% net returns over 15 to 20-year underwriting horizons.

This convergence has led to the rise of platform investing, with real estate investors increasingly acquiring the operating companies themselves, viewing the platform - whether it manages senior housing, data centres, or hospitality - as the ultimate real asset. 

However, this blending of sectors is not universally embraced; from the perspective of some deeply capitalised sovereign wealth funds (SWFs), there is a deliberate, strategic effort to completely separate real estate operations from infrastructure. 

Infrastructure is viewed as inherently tethered to political landscapes, and by keeping these asset classes in entirely different universes, sovereign capital seeks to shield its core real estate holdings from the unpredictable winds of public policy and governmental interference.

Macro Hesitation and Geopolitical Reality

The global macroeconomic environment continues to inject hesitation into the broader market. Earlier optimisms of a rapid departure from the higher-for-longer interest rate environment have been dampened by ongoing geopolitical conflicts and sticky inflation. 

Investors are acutely focused on whether net operating income can genuinely outpace inflation without destroying tenant viability.

In the US market, the mathematics of the current cycle present stark challenges. Interest rates and cap rates are fundamentally misaligned, particularly in the multifamily sector. With spreads sometimes as narrow as 75 basis points, the risk of missing return hurdles is severe, prompting a strict focus on assets that can offer positive leverage.

Conversely, the Middle Eastern outlook, particularly within the Gulf Cooperation Council (GCC), paints a picture of robust resilience. Despite the proximity to geopolitical conflict, family offices and regional investment partners report intense, ongoing capital deployment. 

The logistics sector in the GCC is experiencing massive activity, while offices in Saudi Arabia and the UAE boast exceptionally high occupancy rates against limited new supply. 

Local investors view the current political volatility not as a deterrent, but as a strategic entry point, confident in the historical precedent of the UAE and Saudi economies bouncing back stronger from regional shocks.

Strategic Avoidance vs High Conviction 

In an era where the cost of conviction is high, capital allocation is becoming hyper-targeted. Investors are ruthlessly pruning their target lists to avoid overarching systemic risks, regulatory traps, and crowded trades.

Strategies and Sectors to Avoid

Speculative and Value-Add Development
Core infrastructure investors and SWFs are actively avoiding speculative developments. The appetite for heavy rehab, traditional value-add, or core-plus strategies has evaporated for many, as escalating costs can quickly compress targeted returns.

Traditional Office and Hospitality
Broadly, the traditional office sector remains a primary area of avoidance due to systemic shifts in usage. Hospitality is also viewed with extreme caution by many platform investors due to its deep sensitivity to economic downturns, although GCC-based capital sees unique regional bounce-back opportunities.

Crowded Credit and Regulated Resi
The private credit market, particularly bridge lending, is increasingly viewed as an overcrowded sector with low barriers to entry and compressing spreads. Furthermore, highly regulated residential markets, particularly in urban US cores, are being shunned as the sheer economics of investor balance sheets are being eroded by political pressures, rent caps, and eviction moratoriums, making these assets impossible to accurately model.

Arenas of High Conviction

Alternative Logistics and Storage
Shallow-bay industrial assets and outdoor storage facilities in the US are drawing significant, high-conviction capital. These assets avoid the major structural risks of complex developments while providing essential logistical support.

Demographic-Driven Living
Medical facilities and senior housing enjoy powerful demographic tailwinds. While senior housing requires careful navigation due to operator volatility, the supply-demand fundamentals remain highly attractive. Additionally, student housing, particularly in the US and specific European markets, is a major focus for value-add discretionary funds.

UK Build-to-Core
A fascinating geographic shift is occurring as sovereign capital redirects massive equity tranches toward the UK residential market. Bypassing traditional value-add, these funds are partnering with local operators to execute build-to-core strategies, capitalising on strong governmental incentives and the severe undersupply of housing outside of London.

► Join industry leaders at GRI Living Assets Europe 2026 in London on 25th-25th June

Data Centres (with Caveats)
While the AI-driven demand for data centres is astronomical, investors are hypersensitive to the risk of stranded assets. Conviction here requires a profound understanding of energy grid constraints; a data centre without guaranteed, long-term power generation is deemed an uninvestable risk.

► More insights at Data Centres GRI 2026 online on 9th June

Reframing Illiquidity: The Generational Advantage

The traditional real estate obsession with liquidity and exit strategies is being fundamentally challenged by the diverse capital pools currently dominating the market. 

For platform investors, illiquidity is rarely a concern if the underlying operating company is experiencing growth; they are comfortable working alongside partners for seven to ten years, viewing pricing, rather than vehicle liquidity, as the primary risk.

Similarly, infrastructure strategies inherently embrace illiquidity. Built on 15 to 20-year analysis models, these open-ended vehicles rely on the historically proven reality that infrastructure markets remain relatively accessible even during periods of deep macroeconomic stress.

However, the most striking paradigm shift comes from the sovereign wealth perspective. Operating with internal, zero-cost capital generated from legacy businesses such as gaming, agriculture, and energy, these funds possess a mandate focused entirely on the generation of free-flowing cash. 

They do not invest alongside others to avoid gatekeeping, and they do not underwrite based on exit multiples. With a generational outlook spanning centuries, they can seek pure cash flow from operations, holding assets indefinitely. 

For this class of investor, illiquidity is simply not a metric of concern; they are largely immune to the pressures of the traditional fundraising cycle, allowing them to acquire deeply discounted, high-quality assets while the rest of the market waits for the macroeconomic winds to change.

The True Cost of Conviction

The cost of conviction in today's real asset market is the requirement for absolute operational expertise, deep pockets, and structural alignment. 

Capital is bifurcating. On one side, institutions are blending real estate and infrastructure to capture digital and energy mega-trends. On the other, sovereign wealth is retreating into pure cash-flow strategies, shielding itself from the increasing creep of political intervention. 

Across all strategies, however, the message is clear: while the macroeconomic environment warrants intense scrutiny, the greatest risk for well-capitalised investors is not in deploying capital, but in missing the rare, generational opportunities currently presenting themselves in the global market.

► Join us at the GRI Global Summit 2026 in Abu Dhabi on 4th-6th November to find out what’s on the horizon for international real assets
 

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The GRI Global Capital Connectors 2026 virtual roundtable was sponsored by CBRE Investment Management, Dream Asset Management, GFH Partners, and Neuberger Berman, as well as our Institute Partner, Affinius Capital.

The Real Assets, Shifting Mandates panel featured insights from moderator John Kukral (Northwood Investors), as well as Jean-Luc Seidenberg (UBS), Patrick Brauer (EIA), and Paul Tebbit (BlackRock).

The Cost of Conviction panel featured contribution from moderator Florent Danset (Harbert Management Corporation), as well as David Haltiner (Almanac Realty Investors), Nael Mustafa (GFH Partners), Stephen Braun (Seminole Tribe of Florida Sovereign Wealth Fund), Stephen Dowd (CBRE Investment Management), and Zed Ayesh (Confidential Investments - Private Family Office).