By Timur Tillyaev
Today’s investment environment is defined by rapid change. Exciting tech developments and financial innovations are happening at a rate faster than ever in human history, and it’s easy to see the investment appeal. But picking a winner is like betting on a horse race; it’s fraught with risk and uncertainty. While assets such as crypto and A.I. are creating headlines, beneath the surface lies a volatile mix of ever-changing regulations, competitors, and limited historical benchmarks for assessing the risk involved.
Against this backdrop, it’s no wonder tangible assets are seeing a resurgence. Gold’s recent record highs are one example of investors seeking stable, consistent investments as a key part of their portfolios to spread risk and build resilience. Another sector that stands out for its stability is industrial real estate, which can generate income for a portfolio.
The value of tangible assets
The core advantages of real estate, particularly industrial real estate, are its physical, utility-driven nature. Unlike digital or highly speculative assets, industrial properties underpin our economies by serving an essential function: they house goods, support manufacturing, and enable the just-in-time supply chain movements that bind countries together. This intrinsic function provides a fundamental layer of value that is less dependent on market sentiment or technological hype.
Industrial real estate also offers predictable cash flows. Long-term leases, often with built-in rent escalations, provide investors with recurring revenue that can help offset volatility elsewhere in a portfolio. While value may not surge overnight, industrial real estate assets tend to appreciate steadily, supported by durable real-world demand.
Real estate has historically served as a solid hedge against inflation. As construction costs, land values, and rents rise over time, well-located industrial assets can preserve purchasing power in ways that many financial or digital assets cannot consistently achieve.
Portfolio diversification
Adding industrial real estate to a portfolio can introduce strong diversification across asset types. While technology-driven investments may be sensitive to regulatory and political shifts or sudden market corrections, industrial real estate is influenced by different drivers, such as trade volumes, supply chain efficiency, and population growth. Importantly, these drivers can have strong historical data points to inform risk and trajectory and are far less susceptible to the political pitfalls above.
This diversification is especially valuable in periods of extreme market volatility. There is plenty of current commentary on an impending A.I. ‘bubble’ that serves as a great example of this volatility. Income from real estate tenants can continue even when capital markets are volatile, helping to stabilise overall portfolio performance. For investors seeking to balance growth-oriented investments with defensive assets, industrial real estate can play a critical role.
Geopolitics and the strategic importance of industrial real estate
Geopolitical shifts are increasingly shaping investment decisions, and real estate is no different. Trade tensions, supply chain disruptions, and conflicts have prompted companies to rethink where and how they produce and store goods. As much as we investors diversify to spread risk, so do businesses when making business-critical supply chain decisions. Trends such as nearshoring, reshoring, and regionalisation of supply chains have increased demand for strategically located industrial facilities.
Governments are also investing heavily in infrastructure and domestic manufacturing capacity to reduce reliance on foreign supply chains. This means higher demand for logistics hubs, warehouses, and advanced manufacturing facilities. For investors, this means industrial real estate is not only a financial asset but also a strategic one – closely tied to national economic priorities and long-term policy direction.
In periods of global uncertainty, international capital often gravitates toward stable jurisdictions that uphold the rule of law with transparent legal systems and strong property rights. Industrial real estate in these markets can benefit from increased investor demand, reinforcing its role as a store of value.
A long-term anchor
While innovation-driven assets will continue to shape the future of investing, they are best complemented by assets that offer durability, income, and real-world relevance. Industrial real estate provides this balance. It anchors portfolios with tangible value, benefits from structural economic trends, and responds to geopolitical realities in ways that purely digital or speculative assets cannot. For investors navigating an increasingly complex and volatile investment landscape, adding industrial real estate can help portfolios endure.
