The Road to Recovery: Why 2025 is a Prime Year for Private Real Estate Investment

The private real estate market has faced a challenging cycle over the past two years, with valuations declining and deal activity slowing due to high interest rates and economic uncertainty. However, as we move into 2025, signs of stabilization are emerging, positioning the sector for a potential rebound. At Accordant Investments, we believe this shift presents a compelling opportunity for investors looking to re-enter or expand their holdings in private real estate. 

Why Market Cycles Matter in Real Estate 

Like all asset classes, real estate operates in cycles of expansion, contraction, and recovery. Over the past two years, the private real estate market experienced a 25% decline in value, as reflected by the NFI-ODCE Index. Now, valuations are stabilizing, and history shows that periods of decline often precede strong rebounds. Investors who position themselves strategically at this stage of the cycle may have the potential to benefit from long-term appreciation and income generation. 

Exhibit 1: NFI-ODCE Returns Over Time 

Key Takeaway: Market cycles are inevitable, but downturns create opportunities for investors to capitalize on undervalued assets. 

Key Indicators Pointing to Market Stabilization 

Several factors indicate that private real estate is on the path to recovery: 

• Rebounding Valuations

  The NFI-ODCE Index, which tracks private real estate performance, is projected to continue its recent positive trajectory in 2025 after two consecutive down years.

• Improved Transaction Activity

  A more stable interest rate environment has encouraged increased deal flow, breaking the stagnation of the past few years.

• Sector-Specific Growth

  While areas of the office sector remain weak, multifamily, logistics, and data centers are still experiencing strong demand, supported by long-term macroeconomic trends.

• Inflation Hedge Benefits

  Real estate continues to serve as a hedge against inflation, with rental income rising alongside broader price increases. 

Exhibit 2: Core Real Estate vs Inflation

Key Takeaway: With inflation still a concern, it’s important to consider that real estate income has a history of resilience, often keeping pace with or even outpacing inflation. 

How Investors Can Capitalize on the 2025 Market Shift 

For those looking to enter or expand their real estate investments, we believe 2025 presents a rare window of opportunity. 

• Focus on Growth Sectors

  Multifamily housing, industrial, and data centers offer strong fundamentals and high tenant demand. 

• Take Advantage of Lower Entry Prices 
  Property valuations have yet to fully rebound, creating a favorable entry point for long-term investors. 

• Prioritize High-Quality Assets 
  Core real estate assets continue to provide stable cash flow, lower volatility, and strong inflation protection. 

• Diversify Your Portfolio 
  Allocating to private real estate alongside equities and fixed income can help reduce overall risk and may enhance long-term returns. 

Looking Ahead 

At Accordant Investments, we recognize that the road to recovery may be uneven, but the fundamentals of private real estate remain strong. As valuations stabilize and demand rises, investors who act strategically in 2025 could potentially position themselves for outsized returns. 

IMPORTANT DISCLOSURES

1. Sourced: IDR, as of Q2 2024.
2. As of April 2024
3. The fund will invest in the underlying component funds of the NFI-ODCE Index that comprise a material NAV of the overall index.

Accordant Investments LLC (“Accordant”) is an SEC registered investment adviser. For more information about our services and disclosures, please visit our website at www.accordantinvestments.com. This content does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service managed by Accordant.

NCREIF Fund Index – Open End Diversified Core Equity (the “NFI-ODCE Index”). Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. 

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. Accordant is not adopting, making a recommendation for or endorsing any investment strategy or particular security or property mentioned in this article. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. All investing is subject to risk, including the possible loss of principal. Accordant Investments, LLC (“Accordant”) cannot guarantee that the information herein is accurate, complete or timely. 

Past Performance does not guarantee future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to corresponding past performance levels. Inherent in any investment is the potential for loss. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described in this content were or will be profitable. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Accordant has not made any representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of any of the information contained herein (including but not limited to information obtained from third parties), and they expressly disclaim any responsibility or liability, therefore Accordant does not have any responsibility to update or correct any of the information provided in this article. 

All real estate investments have the potential for value loss during the life of the investment and the sponsor can make no assurances that any investment will achieve its objectives, goals, generate positive returns, or avoid losses.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Accordant ODCE Index Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained online by visiting www.accordantinvestments.com. The prospectus should be read carefully before investing.

Past Performance is No Guarantee of Future Results.

Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The Fund’s investment objective is to employ an indexing investment approach that seeks to track the NCREIF Fund Index – Open End Diversified Core Equity (the “NFI-ODCE Index”) on a net-of-fee basis while minimizing tracking error. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. It is not possible to invest in an index. You cannot invest directly in an index and unmanaged indices do not reflect fees, expenses, or sales charges.

The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Adviser to allocate effectively the Fund’s assets across the various asset classes in which it invests and to select investments in each such asset class. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. 
Additional risks related to an investment in the Fund are set forth in the “Risk Factors” section of the prospectus, which include, but are not limited to the following: convertible securities risk, correlation risk, credit risk, fixed income risk, leverage risk, and risk of competition between underlying funds.

Investors should consult with their selling agents about the sales load and any additional fees or charges their selling agents might impose on each class of shares.

The Accordant ODCE Index Fund is distributed by ALPS Distributors, Inc (“ALPS”). Accordant Investments LLC is not affiliated with ALPS.