Can a US private real estate strategy help Canadian investors now?

While the fund being made available in Canada holds more than those three asset classes, they do comprise the core of what Canadian advisors will be able to access. Schaupp believes those three asset classes are well positioned in the current environment.

Demographic shifts as baby boomers age and gen Z enters the workforce point to a growing demand for apartment housing — the ongoing shortage in housing contributes to that demand as well. Deglobalization remains a massive trend, with many countries onshoring their storage and industrial capacity, driving demand for warehouses. Life sciences real estate — which Canadians have a hard time accessing here — is benefitting from both the aging of baby boomers who will need more medical care, and the constant innovation of the US healthcare sector. 

Dennis Tew, head of national sales at Franklin Templeton Canada, contrasted this exposure with what Canadians currently have access to. REIT investments, he noted, are relatively widespread among Canadian investors. If investors currently have access to private real estate, that is also likely in Canada. The US private real estate market, he believes, offers a level of diversification that investors need.

“This is a natural step beyond Canadian real estate into a bigger more diversified pool like the US with different opportunities,” Tew says.

Schaupp believes US private real estate assets have returns profiles that Canadian advisors may find attractive, especially in an environment of slowing growth. These assets come with low correlations, low volatility, and strong income. Historically, too, they’ve been a solid hedge against inflation. As advisors look for alternatives to the 60/40 portfolio Schaupp sees private real estate as a valid place, following the so-called ‘smart money’ of US institutional investors who have broadly allocated around 10% of their portfolios towards private real estate.

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