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Among the biggest takeaways from Nuveen’s 2025 EQuilibrium survey was an increased investor appetite across private credit asset classes. Of the 800 institutional investors surveyed, 42% plan to increase allocations to private real estate debt in the next 12 months, while investors also showed favour for infrastructure credit, investment-grade private credit and the interest in direct lending continues to remain strong.
Like public fixed income, institutional investors seek to spread positions across more than one segment to increase portfolio resiliency. We are seeing greater diversification within private credit allocations as investors become more comfortable with the risk and return profile of these markets.
Here, we look at the factors that are driving opportunities for real estate debt globally.
With real estate valuations falling around 25% since inflation and interest rates began increasing in 2022, investors are seeing current market conditions as an attractive re-entry point.
Real estate debt continues to deliver a low volatility diversification option to investors. The market has emerged from a challenging period and is now further along its recovery journey. The current sentiment in the US will likely create opportunities from a debt perspective, while Europe continues to undergo changes which could create long-term opportunities for investors.
Long-term, structural shifts continue to drive change across real estate markets, with new opportunities developing for debt investors. A growing protectionist climate in the US could have implications for warehouse and other logistic-based infrastructure, with onshoring supply chains creating greater demand for new developments or refurbishment projects.
In Europe, supply chain infrastructure and related sectors could benefit as the continent seeks to mitigate risks around tariff uncertainty and the threat of increased tension between China and the US. The residential sector remains underpinned by strong fundamentals, as the asset class continues to face a hefty supply and demand imbalance.
Real estate debt’s historical characteristics as a low-volatility, diversifying asset class are coming back into focus. The asset class has shown in previous periods of uncertainty that it can deliver enhanced returns, offering an effective ballast to public market assets.
