Nuveen Asset Management: “Real Assets Draw Attention in an Inflationary, High-Interest-Rate Environment... Offering Diversification Benefits”

[Financial News] Analysts say investors should focus on real assets as external uncertainties grow, including rising inflation stemming from wars in the Middle East and concerns over further interest-rate hikes. Real assets have low correlations not only with stocks and bonds but also with one another, allowing investors to benefit from diversification, they explained.
Abigail Dean, global head of strategy insights at Nuveen Real Assets, made the remarks at the ‘Global Real Assets Market Outlook Press Briefing’ held at Conrad Hotel in Seoul on the 11th. “Inflation has become entrenched, and interest rates are expected to remain high, so it is important for investors to build resilience,” she said.
She added, “Private real assets offer higher risk-adjusted returns than other asset classes. Including real assets in a portfolio can improve the risk-adjusted returns of a traditional stock-and-bond portfolio.”
She viewed the ongoing recovery in global real estate values following their correction as an opportunity to increase real estate allocations in portfolios. According to Nuveen Asset Management, global real estate values fell 15–25% from their peak in mid-2022 but have recently been rebounding, led by Europe.
As real estate values rise, transaction activity, which had slowed, is also recovering. Chad Phillips, global head of Nuveen Real Estate, said, “Over the past 12 months, investment transactions in income-producing real estate across the United States, Europe and Asia-Pacific totaled $936 billion, up 24% from the same period a year earlier. Growth by region was 31% in the United States, 16% in Europe and 20% in Asia-Pacific, while transaction values increased year on year for seven consecutive quarters.”
Regarding the United States real estate market, he explained, “Values declined as bond yields rose but have now begun to recover. In particular, reduced new supply has created room to increase rental income, while solid demand continues, especially in healthcare sectors such as hospitals.”
In infrastructure, the firm highlighted three themes driven by the spread of artificial intelligence (AI) and decarbonization: the energy transition, digital infrastructure and the secondary market.
Biff Oso, global head of Nuveen Infrastructure, noted, “Europe’s electricity demand is expected to increase by approximately 42% in 2032 from 2023 levels due to electrification and the expanded use of AI. In the data-center sector, supply is failing to keep pace with demand, while pressure to use renewable energy is also growing.”
Nuveen Asset Management is an asset manager under the Teachers Insurance and Annuity Association of America (TIAA), managing $1.4 trillion in assets. It is one of the world’s 20 largest asset managers and one of the five largest real estate investment managers globally. The company is currently pursuing the acquisition of British asset manager Schroders plc. If completed, the acquisition is expected to increase its assets under management to $2.5 trillion.

[email protected] Minji Seo Reporter