Global Macro and Real Estate Monthly April 2025

Solid drive off tee but tricky bunker ahead

Dear readers,

Hope you had a great Easter!

Please see our latest issue of our Global Macro and Real Estate.

Please see our executive summary:

Global Macro

• US government policies, such as arbitrary tariffs and threats to other states' sovereignty, have triggered capital flight from the US and economic uncertainty.

• Disrupting trade flows also means disrupting capital flows. If the US government succeeds, the outcome will be fewer international investments in US assets.

• These uncertainties have halted corporate investments globally and are disrupting value chains, mainly harming the US economy but also affecting other regions.

• Inflation is trending down; the inflationary impact of tariffs is still unclear, while currently the uncertainty is likely to be disinflationary first, our structural inflationary thesis remains intact

• In Europe, this has led to more rate cuts and lower bond yields, which supports the real estate market. US interest rates are also expected to decrease in 2025.

Private Real Estate

• The recovery in real estate values has remained on track through Q1 2025. While aggregated data for non-listed real estate funds is not yet available, individual fund reports received so far indicate a solid quarter.

• In the US, the NCREIF ODCE core index delivered a quarterly return of over 1% driven by stable values and income returns

• In Europe, transaction volumes continued to recover during Q1 2025. Despite increased volatility in financial markets, there has been little evidence of deals being disrupted. But yields were largely stable, with no yield compression yet visible.

• The growing anti-US sentiment worldwide is likely to affect fund flows. We anticipate some disruption in capital flows. At this stage, we expect this to be only a temporary effect, but it has the potential to escalate into a more significant issue.

• We have revised our recommended private asset allocation to place greater emphasis on European assets and to increase exposure to less-cyclical sectors. In the US, we prefer alternative real estate sectors and mid-income multi-family properties

Listed Real Estate

• Listed real estate has had a bumpy ride in the wake of historically high equity market volatility

• In recent trading sessions, listed real estate markets, especially in Europe have quickly recovered which confirms our case that real estate can provide stable value in light of economic uncertainties. This is due to attractive valuations and the point in the cycle.

• Our trade idea from March 7th on European listed RE is up by 8% and also Macro Real Estate Global Real Estate prop account portfolio is now 40% funded and invested. It has yielded so far (0.9% in CHF, 3% in EUR and 7.6% in USD).

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