Abigail Dean, Global Head of Strategic Insights for Nuveen Real Assets, emphasizes that long-term megatrends like urbanization, energy demand, and digitization are driving sustained interest in real assets. She highlights the transformative impact of technology on real estate investment, driven by rising demand for infrastructure and power.
Investors are increasingly drawn to real assets, propelled by enduring megatrends like urbanization, energy demand, an aging population, and digitization. These factors create a market that is less affected by cyclical fluctuations, positioning real assets favorably in the current macroeconomic landscape. As inflation stabilizes and the possibility of declining interest rates emerges, experts suggest now is an opportune time to re-enter the real estate market, with natural capital continuing to show value gains.
Technology, particularly generative AI, is expected to contribute significantly to GDP and automate a large portion of current jobs, reshaping industries like logistics, offices, and healthcare, while increasing the need for real assets such as power and logistics buildings.
“Technology is one of those megatrends that has accelerated in recent years, transforming and accelerating demand for infrastructure and power and changing the nature of real estate investment,” Dean said. “Generative AI is expected to add between $2.6 and $4.4tn to annual GDP, and over time is expected to automate between 60% and 70% of tasks currently carried out by employees. This means a wholesale transformation of the way we live and work.”
The conflict in Ukraine has heightened awareness of energy security, leading the European Union to raise its renewable energy target for 2030 to 42.5%. This shift presents significant investment opportunities, with the International Energy Agency projecting that investment in renewables could double to $1.2 trillion annually by 2030.
The COVID-19 pandemic has also reshaped work dynamics, establishing a lasting hybrid work model in many regions, while areas like Southeast Asia have seen strong office market performance. Despite the positive trends, uncertainties persist regarding job displacement due to AI and the effectiveness of decarbonization efforts.
Progress toward a low-carbon economy is notable, with forecasts indicating that about 35% of global power will come from renewables by 2025. However, challenges such as the need for investments in grid and battery technologies remain.
Abigail Dean serves as the Global Head of Strategic Insights for Nuveen Real Assets, overseeing global sustainability, proptech, and research functions. She collaborates with various teams to ensure that investment strategies in real estate, infrastructure, and natural capital are informed by global megatrends and incorporate ESG considerations into fund and asset management.