Private Real Estate vs. Public REITs: Where Investors Find Stability Today
For decades, investors looking to access real estate beyond their own direct holdings had two main choices: private equity-style real estate funds or publicly traded Real Estate Investment Trusts (REITs). Both provided exposure to the asset class, but they behaved very differently.
In today’s economy – defined by persistent inflation, higher interest rates, and volatile public markets – the contrast is sharper than ever. Investors are asking a key question: where does stability really lie?
The volatility gap
Public REITs have historically offered liquidity and transparency. They trade on exchanges just like stocks, and their daily pricing reflects the market’s view of underlying assets. That’s both their strength and their weakness.
In 2022, for instance, listed REITs in the U.S. fell nearly 25%, even as private real estate values dropped far less, according to NCREIF data. The divergence was stark: public markets repriced immediately as interest rates climbed, while private assets, valued quarterly, adjusted more gradually. For investors, that meant significantly more volatility on the public side.
The volatility gap isn’t new. Over the past 20 years, public REITs have shown equity-like swings, while private real estate has delivered smoother return profiles more in line with fixed income. In times of market stress, that stability is especially appealing.
The liquidity trade-off
The flip side, of course, is liquidity. Public REITs allow investors to buy and sell in seconds. Private real estate funds often have lock-up periods and limited redemption windows.
But many institutional and family office investors argue that true liquidity is often overstated. If the goal is to hold real estate for diversification and yield, daily tradability can become a source of anxiety rather than benefit. By contrast, the illiquidity of private vehicles enforces discipline, keeping investors focused on long-term fundamentals rather than short-term swings.
Performance and diversification
Both private real estate and REITs have delivered strong returns over the long run, but the path has differed. According to NCREIF and FTSE Nareit data, 20-year annualized returns for private core real estate hover around 8–9%, while equity REITs have returned closer to 10–11%. Yet the volatility of those returns is roughly double in the public markets.
For many investors, the smoother ride of private real estate is worth giving up a point or two of return. That’s especially true for family offices, pensions, and endowments managing intergenerational capital, where consistency matters more than tactical trading.
There’s also the question of diversification. Public REIT indices can be heavily weighted toward sectors like office or retail, depending on market cycles. Private funds often build exposure across mixed-use, industrial, multifamily, and niche segments such as student housing or data centers, providing a broader hedge against sector-specific risks.
Stability in today’s economy
The current environment reinforces the case for private real estate. With inflation still sticky and borrowing costs elevated, volatility in equity markets remains high. Public REITs, tied to those markets, will likely continue to swing with sentiment.
Private real estate, on the other hand, has shown resilience. Cap rate expansion has adjusted valuations, but rental growth in sectors like multifamily and industrial has kept cash flows stable. Occupancy rates remain above 90% in many mixed-use and multifamily projects, and demand drivers such as urbanization and e-commerce logistics continue to support fundamentals.
This doesn’t mean public REITs don’t have a role. For investors seeking tactical moves or shorter-term exposure, they provide an efficient vehicle. But for those prioritizing capital preservation and predictability, private markets are increasingly seen as the anchor.
The Gilberti Group difference
At Gilberti Group, we view private real estate as a cornerstone for portfolios seeking stability today. Our focus on curated projects in resilient sectors allows investors to benefit from steady cash flows, appreciation potential, and insulation from daily market swings.
But there’s another dimension that sets private real estate with firms like ours apart: relationships. Investing in a public REIT means buying shares in a vehicle where decision-making is distant and investors are faceless. With Gilberti Group, investors gain not only professional expertise and disciplined management, but also direct access to our team. That closeness – knowing who is stewarding your capital, understanding the strategy, and being part of the conversation– is something the public markets simply cannot replicate.
That doesn’t make public REITs irrelevant, but it does highlight the importance of clarity about investor goals. If the aim is to trade in and out with liquidity, REITs may fit. If the aim is stability, diversification, trusted guidance, and long-term value creation, private real estate stands apart.
In a market where volatility has become the norm, private real estate offers something rare: a measure of certainty. If you’d like to learn more about how Gilberti Group structures private real estate investments for today’s environment, we invite you to connect with our team.
