Private markets and the case for private US real estate
As investors look beyond traditional public markets for differentiated sources of return and diversification, private markets are becoming an increasingly important part of the investment landscape. Private equity, private debt and real estate can introduce sources of return that differ from those available in traditional equities and bonds. Research by J.P. Morgan, based on portfolio returns dating back to 1998, found that portfolios incorporating alternative assets delivered higher returns with lower volatility than comparable portfolios invested solely in public equities and bonds, as shown in Graph 1 below.
Graph 1: Alternatives’ effect on portfolio risk/return and diversification
Source: J.P. Morgan, Market Insights: Guide to Alternatives, Q2 2026. Used with approval.
Private markets are increasingly being considered not only as a potential source of return, but as part of a broader portfolio construction framework, supporting objectives such as long-term capital growth, inflation resilience and diversification.
Within this broader opportunity set, private real estate offers access to a deep and diverse market of tangible, income-generating assets, and exposure to a large global economy and hard-currency assets, broadening portfolios beyond domestic markets.
The case for private US real estate
US real estate as an asset class is particularly interesting in this context. Private US real estate can provide access to underlying economic activity that may not be fully represented through listed markets, while also offering geographic and currency diversification through exposure to international markets and a range of residential, commercial and operational real estate opportunities.
The US real estate market has undergone a significant repricing since its post-COVID-19 peak, as shown in Graph 2 below. Higher interest rates and increased financing costs have placed pressure on valuations, but the resulting adjustment has also created greater differentiation between assets, markets and sectors.
Graph 2: Attractive entry point in the US as markets have re-rated since the 2022 post-COVID-19 peak
Source: Green Street. Used with approval.
Periods of repricing can create opportunities for long-term investors, particularly where quality assets have maintained resilient operating fundamentals despite changes in financing conditions. This makes asset-level analysis increasingly important: understanding cash flows, balance sheets, supply and demand, and local market dynamics can help distinguish durable opportunities from assets facing more structural challenges.
At the same time, several areas of US real estate continue to benefit from long-term structural trends, including population growth, housing demand, changing demographics, evolving consumer behaviour and constrained supply in selected markets.
A changing opportunity set in private US real estate
The repricing of US real estate has changed the investment landscape and increased dispersion across the market. However, the opportunity is not uniform across the market, different real estate sectors are being shaped by distinct structural forces:
- Residential: Housing demand is supported by population growth and affordability dynamics, while supply constraints in selected markets can create attractive long-term fundamentals.
- Senior living: Changing demographics and an ageing population are creating structural demand for senior accommodation and care-related real estate.
- Hybrid hospitality and living: Changing preferences around accommodation, flexibility and community are supporting the evolution of hybrid hospitality, co-living and other alternative accommodation models.
- Operational real estate: Sectors such as storage, logistics and medical real estate can benefit from recurring demand, demographic trends and the continued importance of physical infrastructure.
These differences highlight the importance of looking beyond headline market movements and understanding the fundamentals driving individual sectors and local markets.
Navigating the US real estate opportunity
The breadth of the US real estate market also brings its own complexities. Opportunities can vary significantly between regions and property types, making an understanding of local conditions and underlying asset fundamentals important when assessing potential investments.
For investors looking to participate in this market, local knowledge and specialist expertise can therefore be valuable. Understanding factors such as supply-and-demand dynamics, financing conditions, property-level cash flows and demographic trends can help distinguish between opportunities and identify where long-term fundamentals remain supportive.
Familiarity with local markets, established relationships and experience in structuring and evaluating international investments can help investors navigate these complexities and make more informed decisions. This makes how an opportunity is assessed and accessed an important consideration alongside the broader investment case for US real estate.
Topics
stay informed
Explore private market opportunities
Whether you’re looking to diversify your portfolio or learn more about our private market capabilities, our team is here to help.
Disclaimer
Fairtree Asset Management (Pty) Ltd (registration no. 2004/033269/07) is a South African financial services provider (license no. 25917), registered as such with the Financial Sector Conduct Authority.
Fairtree Asset Management LLP (registration no. OC420877) is a United Kingdom MiFID investment firm (license no. 826211), registered as such with the Financial Conduct Authority.
Fairtree Capital International IC Ltd (registration no. 64220) is authorised to carry out investment activities under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (license no. 2293281) and registered with the Guernsey Financial Services Commission.
Collectively, “Fairtree”
The information provided in this document does not constitute advice and is intended to be educational in nature and/or to provide a general description of the product. This document does not constitute a solicitation, invitation, or investment recommendation. Investors are urged to seek specialised financial, legal and tax advice prior to making any investments. Fairtree accepts no liability of any kind resulting from reliance being placed on the information contained in this document.
Although we believe the information displayed in this document is accurate and reliable, no warranty of accuracy or reliability is given, and no responsibility arising in any way for errors and omissions (including by way of negligence) is accepted by Fairtree.
This document, in whole or in part, may not be copied, distributed, revised or amended, reproduced, derivative work created or stored, in any way, manner or form, without the prior written permission of Fairtree.
This document contains information owned by third-party providers, which Fairtree has been licensed to use under strict usage conditions. Redistribution or reproduction, in whole or in part, without the consent of the third-party provider is not permitted. Third-party license providers shall not have any liability for any errors or omissions contained in the information.
A schedule of fees, charges and maximum commissions, as well as a detailed description on how performance fees are calculated and applied, is available on request from the manager of each portfolio (“the Manager”), being either FundRock Company (FR) (Pty) Ltd, Realfin Collective Investment Schemes (RF) (Pty) Ltd, Prescient Management Company (RF) (Pty) Ltd, Boutique Collective Investments (RF) (Pty) Ltd or Prescient Fund Services (Ireland) Ltd, all being registered and approved under relevant legislation.
Additional information, including key investor information documents, minimum disclosure documents as well as other information relating to the portfolio, is available, free of charge, on request from the Manager. The Manager retains full legal responsibility for the portfolios.
The approved manager of the portfolios registered in Ireland under Prescient Global Funds PLC is Prescient Fund Services (Ireland) Limited. Prescient Fund Services (Ireland) Limited is authorised and regulated by the Central Bank of Ireland. These portfolios have been approved as foreign collective investment schemes under section 65 of CISCA.
Collective Investment Schemes are generally medium to long-term investments. Past performance is no guarantee of future performance, and the value of participatory interests may go down as well as up. Collective Investment Schemes are traded at ruling prices and may engage in scrip lending and borrowing.
Collective Investment Schemes may be closed to new investors in order for them to be managed more efficiently in accordance with their mandate. The Manager does not provide any guarantee with respect to the capital or the return of the portfolio. Excessive withdrawals from the portfolio may place the portfolio under liquidity pressure, and in such circumstances, a process of ring-fencing of withdrawal instructions and managed pay-outs over time may be followed. Commission and incentives may be paid, and if so, are included in the overall costs. Investors should note that the value of an investment is dependent on numerous factors, which may include, but are not limited to, share price fluctuations, interest and exchange rates and other economic factors. Performance is further affected by uncertainties such as changes in government policy, taxation and other legal or regulatory developments.
The performance of a portfolio is dependent on making correct assessments of the price movements of securities and other investment instruments.
Financial markets have historically exhibited high levels of volatility and negative movements that have affected the price of all assets within a specific class, and accordingly, a portfolio’s investments will be subject to market risk. Through financial gearing via the long/short process, the portfolio may be leveraged. This will mean enhanced positive gains, but conversely may mean magnified losses. No taxation has been deducted in the computation of returns. The taxation treatment of returns is the investor’s responsibility. All returns are disclosed net of performance fees.
About you…
By proceeding, I confirm that:
- To the best of my knowledge, and after making all necessary enquiries, I am permitted under the laws of my country of residence to access this site and the information it contains.
- I have read, understood, and agree to be bound by the Terms and Conditions and Privacy Policy.
Important notice: Please beware of fraudulent WhatsApp groups and social media accounts pretending to be affiliated with Fairtree or Fairtree employees.
If you do not meet these requirements, or are unsure whether you do, please click “Decline” and do not continue.