A wave of retail capital is reshaping the real estate investment landscape, according to a new report from PwC. The study points to a fundamental shift in who is funding real estate and how capital is being deployed, with individual investors—including retirement account holders and annuity investors—playing a far larger role than in the past.
PwC notes that retail investment capital is expanding at a rapid pace, driven by growing interest in private-market opportunities. This shift is already influencing how investment managers think about fundraising and portfolio construction. Some private capital firms now expect the majority of their future assets under management to come from retail channels, a projection that would have seemed ambitious just a few years ago.
As a result, real estate companies are retooling their strategies to appeal to individual investors. Public and private firms alike are increasingly focused on how to access this expanding pool of capital, signaling a long-term change in the industry’s funding model.
The report also draws a comparison to public equity markets, where returns have become concentrated among a relatively small group of top performers. A similar dynamic is emerging in real estate, with stronger returns clustering around select assets and operators rather than being broadly distributed across the market.
At the same time, traditional institutional investors are rethinking their approach. Many are moving away from indirect investments through fund structures and instead favoring more direct ownership, seeking greater control and potentially higher returns in a more competitive environment.
These shifts are influencing which property types attract new capital. Sectors that were previously overlooked—such as retail—have seen renewed interest, while even office properties are beginning to draw cautious attention again.
Perhaps most notably, PwC suggests that the very definition of real estate investing is changing. After decades in which low-cost capital allowed investors to prioritize price appreciation, today’s environment places greater emphasis on execution and performance. Real estate is increasingly viewed as an operating business, spanning uses like logistics, manufacturing, cold storage, retail, and senior housing.
In this evolving landscape, the industry’s long-standing focus on “location, location, location” is giving way to a new priority: operational excellence.
Source: GlobeSt.