We examine the state of the real estate debt market, including hot-button topics, such as central bank rate setting and low-occupancy office buildings, while not losing focus on other market drivers and other market segments.

Real estate has been rocked by a rapid rise in interest rates that has stymied deal activity and put downward pressure on asset values. If the Fed lowers rates, will it raise investors’ spirits? Or is this a case of “be careful what you wish for?” 

Investors in private real estate might be wondering when the downturn in the market will bottom out. Could the improvement in public-market performance signal that the private market will turn the corner soon? 

After the market dislocation of 2023, investors will be hoping for a calmer 2024 in commercial real estate. We identify five key influences to help investors navigate the challenges and opportunities ahead.  

Insurance costs as a share of income have doubled in the last five years, adding another challenge for property investors. We examine the trend and the variation across U.S. states.

For many real-estate investors, property-type and geography segmentations are the primary lens through which they measure and manage their portfolios. But could real-estate style factors play a role in helping investors manage their portfolios more systematically? 

Cities that ride booms and busts in commodity prices have in the past achieved strong outperformance in commercial-property returns during booms. Has the recent surge in commodity prices had a similar impact on returns? 

Concerns about U.S. banks’ exposure to a slumping commercial-property market have put pressure on bank stocks. We analyze a sample of banks to discern differences in lending patterns by property type and location. 

As U.K. real estate experiences a pricing correction at record pace, it’s natural to make comparisons to the 2008 global financial crisis. We draw on factors in private real estate to better understand current conditions and give us clues to what may happen next.

Investment in industrial real estate has benefited in recent years from the growth of online shopping, a trend that was turbocharged during the pandemic. But are expectations for the sector still grounded in reality?   

Commercial real estate with an estimated value of USD 1.5 trillion stands in the projected path of Hurricane Ian, which is forecast to make landfall in Florida this week.  

Real estate investors are increasingly aware of the risks posed by climate change, but may not realize how much the potential risks vary, even for a relatively homogeneous asset group. We examine the MSCI Climate Value-at-Risk scores of one property type. 

One notable consequence of the COVID-19 pandemic was a shift in real estate investors’ preferences. We compared broad-market purchase activity in 2019 to that in 2020-2021. Where did various types of investors shift in terms of sectors and geographical regions? 

Real estate investors have historically exhibited a strong home bias. But there is evidence that real estate may have become more global based on return and transaction behavior — bucking the trend, evident in listed markets, toward deglobalization.

Real estate portfolios may be particularly vulnerable to the threat of climate-change risks. While investors are increasing their focus on the topic and considerable progress has been made in recent years, some misconceptions remain.

Real estate is an illiquid asset class. But liquidity can also vary considerably between different assets, markets and time periods. Have differences in liquidity within real estate had an impact on investment returns?

For real estate investors, property type and geography segmentations are the primary lens through which they measure and manage their portfolios. Testing five potential real estate style factors, however, were we able to better explain asset-level variation.

The aggregate performance of closed- and open-end real estate funds in the U.S. was strikingly similar in recent years, despite large differences in their strategy and roles in portfolios. But did some investors gain an edge through fund selection?

Some commercial tenants have stopped paying rent amid COVID-19. Without rental income, property funds are not able to pay distributions to shareholders and borrowers cannot service their debt. We analyzed property-fund data to assess the impact on investors.

By evaluating real estate portfolios in terms of different physical risks as well as under different transition-risk scenarios, investors may be able to build a more complete picture of their exposure.

As real estate strategies become more complex and market disruption continues, attribution analysis may prove a valuable tool. We looked at asset selection’s role in driving portfolios’ relative returns during relatively calm and disruptive periods.

Real estate has not historically been immune to growth shocks, but the impact of COVID-19 has been harder to establish than it has for public equities. Discounted-cash-flow scenarios may help investors understand the potential sensitivity of their portfolios.

In real estate investing, capital growth has historically been responsible for most of the observed volatility in total returns. Could breaking capital growth into its components help tell a more detailed story of property portfolios’ performance?

The opacity of real estate markets and the wide spectrum of potential outcomes makes it hard to understand performance. Running a historical “what if” analysis may help institutional investors understand how different choices could have impacted outcomes.

Real estate has always been marked by periods of expansion and sometimes painful corrections. But all cycles are not alike.

Income has long been an important part of real estate returns meaning yields are often heavily scrutinized by investors. However, headline yields do not factor in capital expenditure requirements which can vary significantly. Investors looking to better understand potential “free cash flow” positions of portfolios post-capex may want to adjust the yields they use to account for it.

Office and retail investments’ historic dominance of commercial real estate portfolios is decreasing, with other property types — including logistics centers, student housing, and data centers — increasing. This evolution highlights how technology and the search for yield have led investors to diversify and seek exposure to other property types.

Industrial real estate has outperformed retail assets in recent years, but the trend has been less pronounced in Asia, where store hours, among other reasons, might have led to more resilient retail performance.

In September 1999, NASA’s Mars Climate Orbiter was lost, at a reported cost of USD 125 million, due to a mix-up in measurements.

Investors allocate to private real estate for a myriad of reasons, which means their investment objectives can vary substantially.

While not quite as profound as the Shakespearean original, it is still quite a tricky one for real estate investors to grapple with. Until fairly recently, it is one that has been avoided by the majority of real estate investors due to their heavy home bias. But the increasing global nature of the asset class, combined with rising currency volatility, means the question is becoming increasingly difficult to avoid.

In this Research Insight, we present the results of MSCI’s IPD® Global Annual Property Index 2017, identifying current asset-level real estate performance trends globally and by national market.  The analysis focuses particularly on the latest performance year, 2017.  Global -level real estate delivered a total return of 7.9% in 2017, up from 7.4% in 2016 and marking the eighth consecutive year of positive performance since the global financial crisis. Spain was the best performing...

A decade after the global financial crisis, the era of ultra-low interest rates may be drawing to a close. Many real estate investors worry that rising rates could hurt their portfolios. However, our analysis suggests it’s the macroeconomic fundamentals driving interest rates, not the rise itself, that are most important.

Retailer bankruptcies, department store struggles and empty malls have dominated recent U.S. retail news headlines. The apparent culprit? A mass movement to online shopping. The “retail apocalypse” has led to fears of consumers abandoning physical bricks-and-mortar stores in favor of online shopping. In this paper, we use MSCI data to illustrate that, despite the inexorable rise of e-commerce over the last 20 years, retail asset performance in the U.S. has been surprisingly resilient,...

Investors often target certain markets when executing their allocation strategies.

It is sometimes assumed that larger real estate assets perform differently to smaller assets thanks to reduced accessibility and competition at the top end of the market. Using MSCI’s global private real estate dataset, we find evidence to support the assertion that the size of an asset does have an impact on its performance.

Trends and Insights from MSCI’s 2016 IPD® Global Annual Property Index. Global property held directly by private investors delivered a total return of 7.4% in 2016, marking the seventh consecutive year of positive performance since the global financial crisis (GFC). However, global momentum was negative, the return coming down from 10.7% in 2015. While still positive, global capital growth more than halved in 2016 to 2.5% from 5.4% the previous year, potentially indicating that a turning...

For mainstream financial asset classes, investment performance measurement is based on transaction prices. In contrast, direct real estate is well known for being an illiquid and heterogeneous asset class, making the establishment of purely price-based indexes problematic.

In a global environment of sluggish growth and low interest rates, yields on private real estate are under sustained pressure. Yields have been compressing since 2010 and are now lower than before 2007.

For mainstream financial asset classes, investment performance measurement is based on transaction prices. In contrast, direct real estate is well known for being an illiquid and heterogeneous asset class, making the establishment of purely price-based indexes problematic. In order to overcome these obstacles, MSCI’s private real estate indexes are constructed on the basis of professionally sourced open market valuations, i.e., price estimates based on a set of market process assumptions...