How The World's Biggest Investors Are Dealing With Endless Volatility

Covid-19. Brexit. The rise of populist parties left and right. Russia invading Ukraine. Interest rate shocks. Tariffs. The war in Iran.

Major geopolitical or macroeconomic shocks are no longer rare, isolated incidents — they’re yearly, almost monthly, events. 

So how do international real estate companies decide what to buy and build in a volatile world with access to unlimited information and data but almost zero certainty on what that information means? 

“We now have to write strategies and design our portfolios to cope with the fact of constant volatility,” Tristan Capital Chief Investment Strategist and Head of Research Simon Martin said. The firm has about $17B (£13B) of assets under management and is owned by New York Life Investment Management. 

“Investors have got to rethink a lot of the paradigms that they've used for the last two, three decades.”

Bisnow spoke to some of the world’s largest real estate investors about how they are reshaping their processes and strategies in an unstable market. Individual shocks are impacting short-term thinking in tangible ways, driving investors to pull back from acquisitions, put in place structures to mitigate downside on deals and run the numbers again and again to make sure investments still make sense. 

But today’s volatility is influencing how investors think and act in a deeper, more fundamental way as well, and that is having long-term consequences for the industry more broadly, rewriting what a good investment is and how it is pieced together.

Real estate is trying to look beyond uncertainty but also incorporate it into its operating model.  

“Real estate is a long-term asset class,” Nuveen Real Assets Global Head of Strategic Insights Abigail Dean said. “I think, actually, you do have to pause for breath — what's going to happen next year isn't always the most important thing.”

The short- and medium-term impact of a macroeconomic or geopolitical shock is fairly obvious: Decisions get deferred. 

“Basically, it means people do very little,” said Nick Leslau, chairman of Prestbury Investment Partners. “You can see that from the lack of liquidity in the market, now and in recent years as well.” 

That shows in the slowdown in investment improvement in Q2 2025 after President Donald Trump took office and started toggling tariffs on and off. After a 34% rise in global investment in Q1, deal flow only rose 16% in Q2, JLL found. Prologis cut its development pipeline and changed its mind about raising its guidance because of tariff uncertainty.

In the investment market, Dean said an unexpected economic or political event sends buyers back to check their underwriting: How have assumptions changed, what is the downside on a deal, and can an investment still make the necessary returns in a new worst-case scenario?

Today, buyers are running this analysis over the potential for higher interest rates caused by an inflation surge related to the Iran conflict. 

In an altered economic environment, buyers want to pay lower prices to account for greater uncertainty. But right now, there’s little incentive for sellers to accede to that demand. 

“My guess is that if that's happening right now, all those transactions will just get paused, because this could be over in two weeks, it could be two years,” Oxford Properties Head of European Investments Lee Coward said. “I don't really see many vendors accepting a price chip rather than saying, ‘Let's just pause and pick this up again in four weeks.’”

Buyers and sellers might turn to structured solutions to get deals across the line during persistent uncertainty, Coward said. That can take the form of deferred payments or contingent payments.

“That means that both parties feel comfortable moving forward with a deal but having some kind of protection to the downside,” he said. 

In periods of greater uncertainty, Oxford reexamines whether to sell properties it had previously decided to dispose of, Coward said. If the market isn’t putting the same value on assets as the company, and if it thinks it can achieve a better return by holding, it will essential “rebuy” a building or portfolio. 

The longer-term impact of volatility on how investors are operating is perhaps more profound. There is a greater need for diversification, safe havens, security of income and thinking about how society will change in the future. 

Real estate is an inherently long-term asset class, so investors can afford to look beyond short-term noise, Nuveen’s Dean said. But the persistent nature of that noise is changing how investors construct their portfolios. 

Resilience of income is more important than ever for the large institutional investors that back real estate managers, Tristan Capital’s Martin said. Investors are shying away from sectors and assets that are perceived as cyclical in favor of deals that provide a sense of certainty in an uncertain world. 

“There's a wide-scale rethinking of how best to put together and assemble portfolios at a very strategic level in terms of asset allocation,” Martin said. “... I want a consistent source of income, which is why you see push for credit.” 

In particular, he said, floating-rate debt provides protection when inflation does spike and rates rise. That has spurred the proliferation of real estate debt funds over the past three years, with private equity investors like Tristan following Blackstone and Brookfield in setting up dedicated real estate credit businesses.

Nonbank debt funds came essentially out of nowhere to make up 16% of all CRE fundraising from 2020-2025 as interest rates leapt up and down, JLL reported.

Protection against inflation has been a major theme for equity investors as well, pushing them toward deals that have inflation-linked leases or to sectors with short leases, such as light industrial or residential, where rents can quickly be raised in line with inflation. 

That resilience of income can only be found by investing in assets and sectors that benefit from long-term demographic tailwinds, Dean said. Investors can look through short-term volatility if they have a fundamental belief that income and values will rise, even if over a period of years or decades.

Senior housing is the poster child of this today. Investment into the sector reached its highest level in a decade last year, and 86% of investors surveyed by JLL said they intend to increase their allocations in 2026.

Dean said Nuveen looks to invest on the back of megatrends like urbanization, aging populations, climate change and the growing digitization of society.

“You can take a view on how those things play out over the next 10 to 15 years,” Dean said. “So those things provide an element of certainty.”

Rising volatility also necessitates building up a larger safety net. Oxford Properties’ Coward said his firm makes sure it has liquidity on hand to mitigate potential issues in its portfolio when a shock occurs and to invest in opportunities that might spring up as other investors pull back.

And across the board, the investors Bisnow interviewed stressed the need for diversification. Real estate provides diversification from other asset classes like stocks and bonds, which can buoy it in hard times, but the investors with the strongest staying power typically also diversify within real estate itself. 

“If you've got that right, then you're going to be better protected against these shocks,” Dean said. 

That diversification comes in many forms — between real estate asset classes, between investing via equity or credit, in the kind of return profile an investor is looking at, or even within assets or portfolios. 

And then there is geographic diversification, although that becomes more nuanced in an uncertain world. The desire to invest in safe havens can work in opposition to this, narrowing the number of cities investors are willing to put their money in. 

“I've invested in Latvia, Estonia, Lithuania, Hungary, Poland, and if someone came to me now and said, I can give you a 40% [internal rate of return] and a three-time multiple in Estonia, I’d say you're out of your mind,” said Pelham Partners Chairman Roger Orf, whose firm invests in both the U.S. and Europe. “Real estate's a great asset class, but you can't move it.” 

Orf, the former head of European real estate at Apollo Global Management, said the war in Ukraine has put swathes of Eastern Europe off limits for many investors because it is impossible to understand Vladimir Putin’s intentions. Ten years ago, analysts might have put the probability of Russia invading a Baltic nation at zero to 5% and felt comfortable investing there, but that probability has climbed and feels less knowable today.

The war in Iran has called into question the perceived safe haven status of booming Middle Eastern places such as Dubai. 

“You have to decide where the wealthiest, most mobile and most migration-easy money is going to go in light of geopolitics, uncertainty, and that's going to be the safe haven places,” Gaw Capital Chairman and Managing Principal Goodwin Gaw said. 

He cited London, New York and Hong Kong as stable areas. Hong Kong comes with the higher liquidity of Asian markets compared to Europe, and he said the territory provides access for investors wanting exposure to the Chinese economy without investing in China itself.

He also named southern European cities such as Lisbon and Madrid, which have pleasant lifestyles and low tax rates for wealthy people looking to move from overseas. 

An ever-increasing number of variables is making real estate investing more complex, but it is still possible to build a business that won’t be overly affected by the short-term fluctuations created by war, pandemics or politicians. 

Regardless, it's a calculus all investors must make.

“Uncertainty used to be a bug in the system,” Martin said. “Now, it’s a feature.”