Abigail Dean, Global Head of Strategic Insights for Nuveen Real Assets said that demand for real assets is increasingly driven by megatrends like urbanization and energy needs. With inflation stabilizing and interest rates holding steady, she sees this as an opportune moment for investors to reenter the market, as corporate prices may be at a low point while natural capital shows continued value gains.
According to Dean, investors are increasingly drawn to real assets, propelled by enduring megatrends like urbanization, energy demand, an aging population, and digitization. These factors create a market that is less affected by cyclical fluctuations. As inflation stabilizes and the possibility of declining interest rates emerges, experts suggest now is an opportune time to re-enter the real estate market, with natural capital continuing to show value gains.
“That’s why demand for real assets is less cyclical and more based on these structural trends,” Dean said. “The macroeconomic environment is coming into a supportive period for real assets.”
Technological advancements, particularly generative AI, are expected to significantly impact real assets by automating numerous tasks and increasing demand for renewable energy and digital infrastructure. In real estate, automation enhances building operations, reducing maintenance costs and improving energy efficiency. Meanwhile, precision farming applications in natural capital optimize resource management.
The conflict in Ukraine has heightened awareness of energy security, leading the European Union to raise its renewable energy target for 2030 to 42.5%. This shift presents significant investment opportunities, with the International Energy Agency projecting that investment in renewables could double to $1.2 trillion annually by 2030.
The COVID-19 pandemic has also reshaped work dynamics, establishing a lasting hybrid work model in many regions, while areas like Southeast Asia have seen strong office market performance. Despite the positive trends, uncertainties persist regarding job displacement due to AI and the effectiveness of decarbonization efforts.
Progress toward a low-carbon economy is notable, with forecasts indicating that about 35% of global power will come from renewables by 2025. However, challenges such as the need for investments in grid and battery technologies remain.
Abigail Dean serves as the Global Head of Strategic Insights for Nuveen Real Assets, overseeing global sustainability, proptech, and research functions. She collaborates with various teams to ensure that investment strategies in real estate, infrastructure, and natural capital are informed by global megatrends and incorporate ESG considerations into fund and asset management.