The Case for Private Real Estate

Benefits of a private real estate portfolio allocation:

Real Estate is the 3rd largest asset class in the investable universe

  • Real estate represents $6.5 trillion of market value and 12.4% of the $52.8 trillion investable universe (See Figure 1)

Strong current income

  • Private real estate investments generate average yields of 7-10% vs. 10 Yr US Treasury at 2.3%

Low correlation to stocks and bonds

  • Private real estate investments can provide significant diversification benefits with low correlations to stocks and bonds

A strong inflation hedge

  • Apartment landlords with short term leases can increase rents to keep pace with inflation

Low volatility and high absolute returns compared to stocks and bonds

  • In the last 20 years private real estate values have exhibited ½ of the volatility as the S&P 500
  • Since 2000, real estate has significantly outperformed the S&P 500 in terms of total returns (See Figure 2)