Share sector review – real estate

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What are the highs and lows of this cyclical market? We take a look at the real estate sector and the impact of interest rates, inflation and the sector’s long-term potential.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

3 July 2023

The real estate sector covers lots of businesses involved in developing, maintaining, selling, or letting land or property.

The residential subsector focuses on buying and selling properties for housing. The commercial subsector consists of real estate used for business like offices, retail and hotels. The industrial subsector includes properties used for manufacturing and production, like factories and warehouses.

The real estate sector is cyclical. That means demand and performance tend to ebb and flow along with the health of the broader economy.

Over five years, the UK real estate sector, excluding housebuilders, has underperformed the broader market by around 40%*. But for most of that time, it actually