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Real Estate

U.S. Real Estate: Powering Through Uncertainty with Caution

August 2026 – 11 min read

Real estate fundamentals strengthened in the second quarter as resilient demand and lower levels of new supply outweighed headwinds from economic uncertainty, slower demographic growth and resource constraints.

Executive Summary

ECONOMY

  • The U.S. economy remained resilient in the second quarter, supported by improved hiring, strong business investment, and continued consumer and federal spending despite ongoing geopolitical uncertainty and policy volatility.
  • Growth is led by a narrow set of demand drivers, including higher income demographics, AI and infrastructure capex, and reindustrialization investment with strong business earnings.
  • Interest rates remain a headwind for real estate. Markets have priced in Fed tightening, though a resilient economic outlook continues to support property demand and net operating income growth.

PROPERTY MARKETS

  • Real estate fundamentals strengthened in the second quarter, with improving occupancy trends and continued benefits from lower levels of new supply. Demand increased for certain alternative property sectors, such as senior housing.
  • Capital markets remained active, with CRE transaction volumes increasing 17% year-over-year and debt market liquidity supported by strong competition among lenders with tighter credit spreads.
  • Dispersion remains a defining market feature, with performance increasingly driven by exposure to structural demand drivers and varying significantly across property types and markets.

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Lincoln Janes, CFA

Senior Director, Real Estate Research & Strategy

Important Information

The document is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This document is not, and must not be treated as, investment advice, investment recommendations, or investment research.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved and before making any investment decision, it is recommended that prospective investors seek independent investment, legal, tax, accounting or other professional advice as appropriate.

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Forecasts in this document reflect Barings’ market views as of the preparation date and may change without notice. Projections are not guarantees of future performance. The value of investments and any income may fluctuate and are not guaranteed by Barings or any other party. Examples, portfolio compositions, and investment results shown are for illustrative purposes only and do not predict future outcomes. Actual investments may differ significantly in size, composition, and risk. No assurance is given that any investment will be profitable or avoid losses. Currency exchange rate fluctuations may impact investment value.

Investments involve risks, including potential loss of principal. Past performance is not indicative of future results. Investors should not only base on this document alone to make investment decision.

This document is issued by Baring Asset Management (Asia) Limited. It has not been reviewed by the Securities and Futures Commission of Hong Kong.

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