How Strategy Shaped Returns in Private Real Estate

The market for private real-estate (PRE) funds has navigated one of its most challenging periods in recent memory. The sharp rise in interest rates from 2022 caused a significant slowdown in transaction volumes and valuation corrections that have weighed heavily on fund performance across the risk spectrum. Yet the picture is far from uniform. And for limited partners (LPs) and general partners (GPs) who can look beyond near-term noise, a more instructive story emerges.

The MSCI All Private Real Estate Fund Index (APRE) brings that story into focus for the first time globally. By aggregating fund-level data across the full strategy spectrum, from core to opportunistic, APRE offers something that has been largely absent from PRE benchmarking: a single, consistent lens through which to compare how different investment approaches have performed across cycles. Core and non-core strategies have historically operated in parallel ecosystems, each with their own benchmarks, performance measures and investor communities. Bringing them together shows dynamics that neither ecosystem can see in isolation.

Not all strategies have felt the recent downturn equally. Lower-risk strategies, core and core-plus funds, have demonstrated relative resilience over the past 12 months, delivering annualized total returns of 3.8% and 3.1%, respectively, in the year to March 2026. This outperformance in a difficult environment is unlikely coincidental. Core funds, by design, lean on stabilized income from high-quality, well-leased assets with conservative capital structures. When financing costs rise and transaction markets contract, lower leverage is a meaningful buffer. Less exposure to growth strategies also benefits core funds when discount rates are elevated.

More-active strategies have fared worse in the near term. Value-added funds delivered 1.1% over the trailing 12 months, while opportunistic funds — which rely heavily on execution, leverage and exit timing — produced a return of -0.5%. For managers running these strategies, the combination of compressed exit markets, elevated financing costs and extended hold periods has been a genuine headwind.

Data as of March 2026. Past performance — whether actual, backtested or simulated — is no indication or guarantee of future performance. Source: MSCI All Private Real Estate Fund Index 

Over 15 years, however, value-added and opportunistic strategies have delivered annualized returns of 7.9% and 7.3%, respectively — meaningfully ahead of core (5.8%) and the all-fund average (6.6%). The risk-return trade-off holds, at least over this horizon. 

The 12-month and 15-year comparison makes for a compelling headline, but it risks oversimplifying a fundamentally cyclical asset class. Private real estate doesn’t move in straight lines, and the same strategy can look very different depending on when capital was deployed, when assets were acquired and when funds were benchmarked. This is where the full index time series, and the flexibility to explore it, becomes genuinely useful for both GPs and LPs. Using the chart below, hover the mouse to see what impact rebasing the index at various points in time has on performance comparisons. 

Past performance — whether actual, backtested or simulated — is no indication or guarantee of future performance. 

The takeaway for LPs is not that one strategy is superior, but that the timing of commitments, duration of measurement and phase of the cycle all profoundly shape observed outcomes. Having a benchmark that captures the full spectrum in a consistent framework, as APRE now does, is the prerequisite for making those comparisons rigorously. 

For GPs, the implications are equally pointed. In a fundraising environment where LPs are more discerning about the risk they are underwriting, the ability to contextualize a fund’s recent performance against the broader strategy universe — and across the cycle — is a meaningful tool for transparent investor communication. 

Private real estate has always rewarded strategy discipline and penalized poor timing. The current cycle is simply a particularly vivid reminder of that. For LPs, the critical question is not whether to be in private real estate, but where in the risk spectrum to be, and when to move. For GPs, context is everything: Short-term underperformance in a higher-risk strategy is not the same story as structural failure, and the ability to demonstrate that distinction to investors matters.