Too much tech? 5 real asset stocks backed by scarce supply

In New York, tenants are signing up to pay double the going rent for offices that haven't been built yet. Across the pond in the UK, households pay almost £2 billion a year for wind and solar power the grid can't carry to where it's needed.

One is a property story and the other is about infrastructure, but both come down to the same thing - scarce supply.

That scarcity is central to Resolution Capital's case for real assets, at a time when concentration risk is rising and much of the return in global equity portfolios comes from a narrow group of stocks.

The firm argues that real assets offer something different - growth, income, and cash flows that are often contracted, regulated or linked to inflation, with infrastructure in particular showing lower volatility than global equities.

In a recent presentation, real estate portfolio manager Marco Colantonio and infrastructure portfolio manager Mark Jones explained why they’re positive on both and named the stocks behind their views. The firm also combines the two strategies in its Global Real Assets Fund, launched in July, with a default split of 60% infrastructure and 40% property.

Rates are only part of the story

Colantonio argues that supply, more than interest rates, drives how property performs. When the US Federal Reserve lifted rates from 2004, REITs kept rising because the economy was strong. What hurt them was a building boom leaving landlords with too much empty space and too much debt just as the GFC hit.

Today, supply is going the other way. New construction is running at about 1.5% of existing stock, below the long-term average of just over 2%, and is expected to fall further.

“Even if we were to have an economic slowdown, we think that real estate is going to be relatively well insulated because we're starting from a position of very low supply," he said.

Jones sees infrastructure in a similar way. Over the past 20 years, rising rates haven't dented returns from global listed infrastructure. He also thinks stretched government budgets help the sector, because governments will need private money to fund new assets. He pointed to France, which carries net debt of around 120% of GDP.

"For that economy to maintain, refresh, build new infrastructure, the government will not be able to do it. It will have to incentivise private capital. That is where listed infrastructure companies will benefit."

Why building doesn't stack up

Supply is low largely because building has become so expensive. Construction costs are up roughly 40% globally since 2019, while property values have been broadly flat.

"So in real estate, you're basically getting the land for free, you're just paying for the building at the moment," Colantonio said.

With occupancy high and supply tight, Colantonio expects REIT earnings per share to grow 7–8% a year over the next couple of years.

Four property stocks

The fund leans towards healthcare (22%) and data centres (15%), and it holds three times the benchmark's weighting in the UK.

Welltower (NYSE: WELL) is the largest holding, rents seniors housing mainly in the US. America's over-80 population is projected to grow about 5.5% a year, while new supply is near historic lows. Colantonio expects earnings growth of around 17% a year for the next three years.

Equinix (NASDAQ: EQIX) runs about 300 data centres in major cities, each shared by dozens of tenants. It avoids the large single-tenant AI facilities Colantonio is wary of.

"Whether AI fizzles or is the greatest thing that's ever happened to us, Equinix's demand will remain resilient because it's all about connectivity and about the digitalisation of the economy," he said.

Land Securities (LSE: LAND) UK retail property values have halved from their peak a decade ago, and REITs trade at a further 20% discount to book value. The stock trades on 13 times earnings with a 6% dividend yield.

Sumitomo Realty (TSE: 8830) rose close to 70% in 2025, even as Japanese rates climbed from zero to 1.5%. Tokyo office rents are up 13% on a year earlier.

The case for infrastructure

Jones expects listed infrastructure to grow earnings faster over the next five to 10 years than it has over the past 20. "And importantly, you are not going up the risk curve."

He contrasted that with big tech's spending on AI. 

"You do not know who the AI winner is going to be," he said. "In infrastructure, the opposite is the case. Increasing capital is matched with known return on capital."

Many new projects, such as grid connections for data centres, run on 20-year contracts where the customer pays whether it uses the power or not. Listed infrastructure has had only one year of negative earnings growth in the past 20 years, during COVID.

Jones was clear about the asset class's role: "Listed infrastructure's role is not to involve itself in a shootout of total return versus global equities. That is not its place in your portfolio." 

Over 20 years, it has returned about 10% a year with lower volatility than global equities.

Electrification - the next spending wave

Jones sees electrification as the next big wave of infrastructure spending. SSE (LSE: SSE), a top holding, owns Scotland’s electricity transmission network and has been tasked with building the link that carries the region’s wind and solar power south to London and southern England.

Jones said the network is worth about £5 billion today and is expected to reach £30 billion within five years. The investment is regulated and the UK government has approved the plan.

What could go wrong

Getting permission to build is a risk across both strategies, and the property fund has seen it play out locally. It holds a 1% position in NextDC. Power delivery to the company’s M3 site, where Amazon is ramping up, has stalled on community opposition. Amazon has the right to terminate its pre-lease, and the fund hasn’t added to its position.

Colantonio warned that Australia risks losing data centre demand to Malaysia or Jakarta. But with approvals getting harder, he said that’s “actually very positive for the existing data centre incumbents” such as Equinix and Digital Realty, which make up 14 of the fund’s 15% data centre exposure. 

For infrastructure, Jones said the key uncertainty for projects like SSE is whether they can be built. He also conceded the sector is “not as cheap as it was 20 years ago”, though he noted it’s well off its highs. 

ETF

Resolution Capital Global Property Securities Fund – Active ETF (RCAP)

Global Property

View

ETF

Resolution Capital Global Listed Infrastructure Fund - Active ETF (RIIF)

Alternative Assets

View