Bank of America released a 2025 Specialty Asset Management (SAM) Outlook (PDF) on the market dynamics impacting commercial real estate (CRE), farmland, timberland and energy assets. The paper finds real assets play an increasingly important role in diversifying a portfolio as investors seek to position themselves for long-term wealth creation in a dynamic market. “Characteristics of real assets, such as generally being uncorrelated with traditional investments and serving as a hedge against inflation, are increasingly relevant in the current environment,” said Ken Shepard, SAM Executive at Bank of America Private Bank. “For well-informed, long-term investors, 2025 will be a good year to selectively build positions in certain real asset sectors.” The following themes are explored in the 2025 SAM Outlook:
- CRE demonstrates positive momentum: While CRE has weathered a range of challenges over the past few years, investor confidence in the space is growing, signaled by rebalancing supply and demand, stabilizing valuations and increasing liquidity.
- Farmland offers a pathway to stability and diversification: The 2025 crop year holds opportunity for knowledgeable investors as competitive pressures lessen and farmland values remain stable to slightly lower, allowing for more strategic maneuvering.
- Timberland bridges market uncertainties: Long-term investors with lower risk profiles in search of alternatives may find timberland an attractive investment, as biological growth is largely insulated from market cycles and geopolitical risk.
- Energy use increases globally: Myriad factors, including population growth, expanding manufacturing and rising living standards in emerging economies, have paved the way for increased energy usage. Looking ahead, the domestic energy supply will favor natural gas, renewables and other carbon-friendly sources.