UBP flags operational real estate as value driver as higher rates pressure property valuations

• Union Bancaire Privée flagged a new European real estate cycle since 2022, marked by sharply higher yields and falling transaction volumes.
• It expects elevated long-term bond yields to keep weighing on property valuations over the medium term, citing debt, deficits, inflation, geopolitics.
• Traditional core real estate faces limited near-term upside, with a sustained recovery via yield compression seen as unlikely.
• UBP highlighted “operational real estate” as a preferred approach, tying income to business performance rather than fixed rents.
• It pointed to luxury hospitality, high-end US multifamily, and distressed repositioning opportunities, while warning of higher operating risk.

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