Infrastructure, natural resources outperformed property in the third quarter of 2025
Jan 9, 2026, 10:02 PM UTC
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In the third quarter of 2025, returns for real estate flatlined while other real asset classes posted positive returns.
Infrastructure investments recorded the highest returns in the third quarter, 2.3 percent, of private real assets, according to research by MSCI. Natural resources followed, posting quarterly returns of 1.4 percent.
Real estate’s third-quarter performance, coming in at 0 percent, was the worst among all the private equity classes MSCI analyzed. It also fared worse than the quarter before, when the asset class posted second-quarter returns of 1.7 percent.
Overall, private equity funds had returns of 3.1 percent in the third quarter, down from 4.4 percent in the second quarter of 2025. Venture capital investments led the growth, performing the best in the third quarter with quarterly returns of 6.7 percent.
Pockets of the real estate market continue to struggle, and, as a result, target allocations to real estate fell last year for the first time in 13 years, according to MSCI. It’s no secret that the office and retail sectors have had their challenges over the past decade, but data centers — though highly prized by many investors — also face hurdles as they have to be refurbished to handle the demand for AI.
Many investors are turning from equity real estate to real estate debt, which can offer better downside protection, MSCI noted. In the third quarter, real estate debt recorded returns of 1.2 percent, down 40 basis points from the quarter before.
Through the second quarter of 2025, there was $4.8 trillion worth of commercial real estate debt in the United States, with banks and thrifts — such as credit unions — holding the biggest portion of that debt. Pension plans increased their CRE debt balances by nearly 12 percent compared to the year before, which was the greatest rise among institutional investors.