Published on Thursday, March 12, 2026
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Investors may find renewed upside in property-level income and valuations nearing recovery.
Institutional investors are rethinking where they put their capital in private markets, and a new report from Hines argues that real estate may be poised for a rebound. The firm's Head of Global Research, Joshua Scoville, and Senior Managing Director, Michael Hudgins, describe private markets as a "core component" of institutional portfolios—but one that now requires discernment. Not all strategies, they caution, are positioned to benefit equally from today's shifting environment.
According to Scoville and Hudgins, some private market strategies remain closely tied to monetary policy, while others are anchored in property-level cash flows and long-term structural forces. "In today's shifting environment, many investors risk finding themselves in overweight strategies whose strongest tailwinds are beginning to fade," they wrote. Allocators, they argue, must balance assets that move with interest rates against those driven more by operational performance and demand patterns.
Hines characterizes private real estate as a "high-conviction asset class" with improving prospects at this stage of the cycle. Core private CRE funds have historically derived more than 80% of long-term returns from income linked to rents and lease structures, according to NCREIF data covering the past two decades. Those income distributions, Hines notes, tend to be both tax-efficient and competitive—or even superior—to after-tax yields from private corporate lending.
Beyond income, valuations in private real estate still sit below their 2022 peaks, after a period of underperformance relative to private credit. Based on data from MSCI-Burgiss, NCREIF, and Hines Research, the firm sees cyclical upside potential of as much as 60% if valuations revert toward historical norms. Previous downturns—spanning 2001–2002, 2008–2010, and 2019–2020—have shown that core private CRE indices can outperform by nearly 20% in the subsequent recovery. With six consecutive quarters of positive returns, Scoville and Hudgins suggest "the trough may be behind us."
Investor behavior appears to support that view. Among the largest non-traded equity REITs, capital raised during the first three quarters of 2025 climbed 36% from the same period in 2024, while net flows turned positive after a stretch of outflows.
Private corporate debt remains "a dependable income engine," the authors write, but private real estate now stands out for its combination of durable, property-level income, historically attractive entry valuations, and visible recovery potential aligned with long-term real asset demand.