How private real estate can add income and diversification to your portfolio

One of my favourite things to hear in interviews is when a portfolio manager puts their money where their mouth is - investing in the very ideas they’re sharing.

For Rich Kimble, Lead Portfolio Manager at Nuveen Real Estate, that means backing both listed REITs and private real estate.

In today’s uncertain macro environment, more investors are looking beyond traditional equities and bonds in search of diversification. 

I sat down with Kimble to discuss the Nuveen global cities strategy, and more broadly, the different types of real estate as an asset class and the opportunities that exist in private real estate.

Kimble explains why private real estate offers a compelling mix of steady income, inflation protection, and genuine diversification, thanks to its lower correlation with stocks and bonds.

And while the asset class is less liquid than listed REITs, Kimble argues that for many investors, the long-term benefits make it a trade-off worth considering.

For the full picture, watch the interview below.

Please note this interview was filmed 1st July, 2025.

"It’s a great entry point for private real estate"

Global real estate markets have taken a hit in recent years.

With global property valuations down and limited new supply on the horizon, Kimble believes we’re now entering a new cycle, and that current conditions represent an attractive entry point for long-term investors.

“We’re down about 20% from the peak,” Kimble says. “We’re entering a new cycle, so we’re entering the recovery phase.”

With over US$1.3 trillion in assets under management as of March 31, 2025, Nuveen is one of the world’s largest investment managers. Its real estate arm, where Kimble sits, spans 30 cities and manages over US$140 billion in assets.

Its global cities strategy invests in private commercial real estate across the US, Europe, and Asia, as well as real estate debt and listed securities.

Kimble believes the strategy is well placed to offer both income and long-term capital growth.

Listed vs private property

For investors accustomed to listed REITs, private real estate offers a different profile.

“Private real estate typically trades at fair market value,” Kimble explains. “That means lower volatility than listed markets – and it’s a real diversifier.”

The diversification benefits are substantial, he says. Private real estate shows low correlation with equities, fixed income, and even listed property. It also acts as a natural hedge against inflation.

The downside? Illiquidity. Unlike listed REITs, you can’t trade in and out daily. But for long-term investors, Kimble argues, that’s a trade-off worth making.

“I own both personally,” he says. “But for clients who don’t need daily liquidity, private real estate adds something very different.”

What Nuveen is avoiding

Not every corner of real estate is looking attractive right now. Office property remains a drag.

“I didn’t like office before the pandemic,” Kimble says. “It’s a chronic underperformer and very capital intensive.”

Nuveen has avoided US office space in recent years, which has served them well.

Apartments in the US have also lost some appeal. Oversupply has kept Kimble on the sidelines for nearly four years.

Where the opportunities are

Instead, Nuveen is leaning into segments with structural tailwinds.

“We like light industrial,” Kimble says, citing growth in e-commerce and the push for onshoring in the US.

Healthcare real estate is another standout. With an ageing population and very little new supply, vacancy rates are at record lows.

“Think medical office buildings and outpatient centres,” he says. “It’s a sector with strong demand and not a lot of competition.”

Necessity-based retail, like grocery-anchored shopping centres, has also proven resilient, especially in a tougher consumer environment.

Looking outside the US

Kimble is cautious on US housing, but much more positive elsewhere.

In Australia, he sees strong fundamentals driven by population growth and housing shortages. Student accommodation also looks attractive, thanks to rising enrolments and limited new development.

In Japan, Nuveen likes both traditional apartments and senior living assets, particularly in Tokyo and Osaka. In Europe, the focus is on housing and student accommodation in key cities, as well as industrial assets in Germany.

Managing risk in an uncertain world

Liquidity risk is a common concern in private real estate. Kimble says the key is managing leverage carefully – a lesson he learned during the global financial crisis.

“The funds that failed didn’t have real estate issues,” he says. “They had balance sheet issues.”

By reducing debt in 2022, Nuveen was able to manage liquidity and support returns.

A portfolio diversifier with real-world appeal

For investors already holding global equities and listed REITs, Kimble believes private real estate still adds something new.

“It offers stable income, inflation protection, and genuine diversification,” he says. “And right now, valuations are compelling.”