Multi-asset outlook Part 4 – Private Markets and real estate 2026: Diverse opportunities, high complexity

With their diverse sub-asset classes, private markets offer suitable investment strategies even in a challenging investment environment. “However, this diversity also means complexity,” says Nicole Grützmacher, Director of Alternative Investments and Senior Investment Specialist at FERI. “Selection and due diligence will therefore remain the decisive factors in the coming year.”

The infrastructure sector, which is in high demand, is characterized by high investment requirements due to decarbonization, digitalization, and geopolitical fragmentation. "In Europe, extensive subsidy programs and the continuing pressure to modernize existing network and supply infrastructure are opening up opportunities. In the US, fiscal policy measures and industrial reshoring programs are supporting the market environment," says Grützmacher. At the sector level, industries such as energy and digital infrastructure are therefore developing particularly dynamically. At the same time, future topics such as the circular economy, district heating, and smart metering are gaining in importance.

Private debt benefits from higher key interest rates

In private debt, Grützmacher expects risk premiums on financing to stabilize in 2026. As a result, the performance expectations for this asset class will once again depend more heavily on the base interest rate and thus on the monetary policy of the central banks. “Provided that key interest rates fall only moderately, the attractive return expectations will remain intact in principle.” 

In the opportunistic special situation or subordinated loan segment, default rates rose in 2025 – a trend that is likely to continue in 2026. “Unlike in the traditional bond market, however, private debt managers can act much more flexibly and negotiate the suspension or deferral of interest payments in times of crisis in order to increase companies' chances of recovery,” says Grützmacher. However, this often requires the provision of additional equity capital by the owners. Alternatively, special situations funds could provide capital at higher terms. This means that opportunities in the private debt sector will continue to arise for opportunistic investors in 2026.

Due to the unexpectedly extended holding periods for private equity investments, fund financing via so-called NAV loans (loans based on net asset value) is gaining in importance. At the same time, the size of the private debt market has led to the development of a liquid secondary market. There, professional investors can further diversify their portfolios and participate in private debt transactions at discounted prices.

Private equity: Price expectations diverge widely

In the private equity segment, capital raised and transaction activity have stabilized, albeit well below the record year of 2021. “After a decade of steadily rising valuations, the price expectations of buyers and sellers in sales negotiations have diverged increasingly in recent years. This seems to have calmed down somewhat in 2025, and we are seeing an increase in transactions again in the fourth quarter, with the IPO market also picking up,” reports Grützmacher. 

In the buyout segment, Grützmacher believes that small and mid-market funds will have an advantage over large-cap funds thanks to lower entry valuations and more diverse exit options. The secondaries sector—i.e., the acquisition of fund shares on the secondary market at significant discounts to net asset value—also offers attractive investment opportunities in the challenging market environment and continues to gain in importance.

Real estate markets on the road to recovery

FERI is observing a gradual recovery in the real estate sector. “2026 is likely to be the year in which the markets gradually emerge from the correction and return to growth,” says Robin Haber, Director of Private Markets and Investment Manager at FERI. In residential real estate, he sees opportunities in existing properties with a solid energy profile. In the commercial segment, the location of the building and the flexible usability of the space are crucial. He therefore takes an extremely selective approach when choosing suitable properties.