While debt markets reopened and liquidity improved—narrowing bid-ask spreads—investors remained selective, and wide dispersion across sectors persisted. On average, private real estate values bottomed in late 2024 and stabilised throughout 2025, with office lagging other major sectors in finding stability. Transaction activity also gained momentum as pricing became more actionable for both buyers and sellers.
Within this environment, ADIA's Real Estate Department (RED) was active throughout 2025, balancing portfolio optimisation with disciplined capital deployment. The Department continued to recycle capital, enhance portfolio efficiency, and maintain the flexibility needed to respond to changing market conditions—reflecting a sustained emphasis on discipline, agility, and dynamic portfolio management.
RED's investment commitments remained aligned with themes where market dislocation and structural demand created attractive entry points. In the United States, RED increased its exposure to senior housing, supported by demographic tailwinds and limited new supply, consistent with strengthening sector fundamentals. In Asia, RED deepened its relationship with a valued partner through an investment in its Greater China business. This capital will support the growth of logistics and digital infrastructure platforms positioned to benefit from strong export markets and the secular expansion of e-commerce and AI-related demand. In Europe, RED continued to expand its exposure to residential and equity solution strategies, capitalising on opportunities created by bank selectivity and refinancing needs, which favoured lenders with strong underwriting capabilities and flexible capital structures.
Alongside these equity investments, private credit continued to be a core focus throughout the year. Real estate credit has demonstrated resilience through periods of rate volatility, and RED expanded its existing platforms while backing the creation of a new platform in Hong Kong targeting senior secured loans. These private credit strategies continue to provide stable income and valuable optionality as the cycle normalises.
In parallel, RED pursued an active disposition programme to rotate out of assets where business plans had been completed and to fund higher-returning opportunities. Key initiatives included the sale of a student housing portfolio in the US and the divestment of retail assets in Singapore, while in Europe, RED exited selected residential assets in the Netherlands and retail assets in the UK. These actions reflect a disciplined approach to recycling capital in a market where liquidity has improved but remains differentiated by asset quality and depth of buyer demand.
Operational execution and development discipline remained central to value creation across the portfolio. Major development projects advanced throughout the year, including a master-planned London residential development, where the first units were completed in September 2025, while projects in the Bay Area, Stockholm, and Sydney remain on track to meet their targeted delivery milestones.
RED also continued to strengthen how insights are translated into investment decisions. During 2025, the team progressed the use of artificial intelligence in a measured and deliberate way, piloting tools to improve productivity and generate insights to inform decision-making. These initiatives improve consistency, speed, and analytical depth across the investment process.
Looking ahead, 2025 reinforced that the next phase of the cycle is likely to be led by income growth, operating capability, and sector selection rather than broad market exposure. Logistics and digital infrastructure remain well supported by structural demand and constrained supply dynamics, while living sectors—particularly senior housing—continue to offer durable fundamentals underpinned by demographic shifts.
Overall, the asset class demands a heightened level of selectivity, capital expenditure discipline, and strategic repurposing where appropriate, as technology and changing work patterns reshape utilisation. Against this backdrop, RED's focus on high-conviction themes, disciplined capital recycling, and selective deployment positions the portfolio to capture recovery upside while maintaining resilience in an evolving operating environment.
