Download A Better Way to Assess Inflation and Risk in Real Estate
Inflation is most commonly seen as a threat to investor portfolios. This reasoning is the cause of oversimplification and basic analyses that overlook important factors. Likewise, risk-adjusted performance is often assessed narrowly or not at all. Understanding risk-adjusted behavior, and how inflation affects it, is vital if you want to truly understand your market and stay ahead of the competition.
A Better Way to Assess Inflation and Risk in Real Estate provides insight into how investors can view inflation, risk-adjusted performance, and risk in general.
Key Findings
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Private CRE and Inflation |
Secondary |
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U.S. private CRE risk-adjusted returns tend to be larger during times of high inflation. Post-GFC, higher inflation tends to help the asset class’s excess returns. |  |
Seen in Orlando and Atlanta apartment markets, gains are amplified in strong markets more than losses are amplified in weak markets. |
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Post-GFC Inflation Sensitivity |
Private Apartments Outperform |
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Secondary apartment market returns are more sensitive to inflation, while primary apartment markets tend to have more stable excess returns under rising inflation. |  |
Secondary apartment market returns are more sensitive to inflation, while primary apartment markets tend to have more stable excess returns under rising inflation. |
Our team at Berkadia can help you navigate these complexities discussed and equip you with some of the most explanatory analytical tools available today.