Favourable supply-demand dynamics and a return of liquidity are driving a recovery in real estate, boosting transaction volumes across the market, according to some of the largest alternative asset managers.
According to Brookfield Asset Management, recovery is now evident in the secured real estate credit market following the downturn between 2022 and 2024, largely due to a reset in asset values, pricing and financing conditions.
Brookfield highlighted that, after lending markets froze during the downturn, liquidity is now improving. This is evidenced by a resurgence in commercial mortgage-backed securities single-asset single-borrower issuance.
The firm said that stronger and more stable cash flows not only support ongoing debt servicing but also improve refinancing prospects for real estate.
Overall, Brookfield stated that the recovery in real estate credit is not confined to the margins but reflects “a sector that has reset, repriced, and re-established discipline following the dislocation of 2022–2024”.
“Improving loan performance and stabilising credit metrics are not simply cyclical; they are indicative of a market that has absorbed stress and emerged on fundamentally stronger footing,” Brookfield said in a memo.
Read more: US banks return to commercial real estate
Similarly, Ares Management said the real estate recovery is under way, with fundamentals and liquidity aligning to support growth.
Ares pointed to a favourable supply-demand backdrop, with demand for rental housing and industrial buildings remaining strong, while supply remains constrained.
The manager also noted that real estate transaction volumes rose 31 per cent year-on-year in the fourth quarter of 2025, supported by narrowing bid-ask spreads and early signs of price appreciation across sectors.
Fundraising is also improving, with commitments to closed-end funds up around 20 per cent year-on-year, signalling renewed confidence from institutional and wealth investors, stated Ares.
“n 2025, private real estate finished the year with positive performance, extending the streak to six consecutive quarters,” Ares said in a memo. “While index returns remain approximately 17 per cent below the recent peak recorded in Q3 2022, this backdrop underpins our view that the real estate recovery is not only underway but still has meaningful room to run.”
Read more: Real estate debt: A cautious recovery
Brookfield also noted that, amid market concerns over private credit’s exposure to software and the potential impact of artificial intelligence, real estate credit is less tied to the same risks affecting direct lending.
“Within this context, private real estate credit stands out for its differentiated risk profile, asset-backed downside protection, and low correlation to other fixed income alternatives,” Brookfield added
