Real estate’s role as an inflation hedge in a post-COVID world

OpinioPro Selection
By September 10, 2020 13:22

Real estate’s role as an inflation hedge in a post-COVID world

  • The Federal Reserve's recent Jackson Hole Symposium has renewed attention on inflation in light of the unprecedented global fiscal and monetary policy response to the COVID-19 pandemic
  • If inflation exceeds capital market expectations, risk assets could underperform. As such, investors should consider assets which may offer some protection against a potential increase in inflation
  • In examining data for private commercial real estate in the U.S and the UK, we find that it has some beneficial ability in protecting investors from inflation compared to other asset classes
  • Property types with shorter-duration leases appear to offer the most inflation benefits
  • In a constructive growth scenario accompanied by an acceleration in inflation, we find that there could be strong reasons to own multifamily, lodging, and selective offices. Industrial properties with tenants that benefit from strong structural tailwinds could also provide inflation protection opportunities
  • Under a sub-par growth environment with rising inflation (or a mild stagflation), we believe protection may be found in owning multifamily, non-major markets, and grocery anchored “essential” retail 
OpinioPro Selection
By September 10, 2020 13:22

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