HomeInsightsResearchQuarterly UpdatesReal Estate Q2 2022

In this report:

The impact so far

Rising rates

Higher-risk strategies lose favor

Pressure across sectors

Outlook

Preqin Quarterly Update: Private Equity Q2 2022

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Real Estate Q2 2022

July 12, 2022

Summary

After being hit hard during the pandemic, the real estate asset class was slowly recovering. But higher rates are leading to headwinds on multiple fronts. Higher borrowing, higher construction costs, and pressure on parts of the market that had seemed relatively well protected could reduce activity further.

Dave Lowery

Head of Research Insights

Will higher rates be real estate's nemesis after narrowly avoiding a COVID-19 crash?

So far, 2022 is proving far more turbulent than many expected. Investors have had a rough ride, with many risk assets delivering negative returns – notably including those previously viewed as lower risk. Inflationary concerns were heightened going into 2022. The onset of war in Europe, with Russia’s invasion of Ukraine, has caused far higher inflation than many expected. As a result, the Federal Reserve and other central banks around the world have responded by reining in the excess liquidity they provided and tightening policy significantly. Central bankers and policymakers have a fine line to tread, given the sheer scale of debt around the world. Will they prioritize the fight against inflation over the need for growth? Right now, it’s too early to say.

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We'll be taking a break from publishing our Preqin Quarterly Updates in Q3 2022, but you'll be able to read our full analysis of developments and opportunities in each asset class up to the third quarter in our 2022 Global Annual Reports. Look out for them in December 2022.

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In an ever-changing economic environment, private capital markets reflect the impacts of global political changes, government and regulatory scrutiny, technological advances, public opinion, and consumer behavior. Fund managers, investors and those working with them need to adapt - and fast.

Read Preqin's Quarterly Updates for the latest insights and data across private equity, venture capital, private debt, infrastructure, natural resources, hedge funds, and real estate asset classes.

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