ESG & Sustainability — June 10, 2022

The International Real Estate Index — A hedge against expected inflation

Real estate has long had the reputation of being at least a partial hedge against inflation, since both rental income and property values typically respond positively to inflationary pressures. The iSTOXX Developed and Emerging Markets ex USA PK VN Index (“Int’l Real Estate Index”) has lived up to this reputation historically and is continuing to do so in the current inflationary environment.

This paper provides a brief overview of the Int’l Real Estate Index and analyzes the extent to which the index has been acting as a hedge against expected inflation since its inception. The study also examines the impact expected inflation has had on the index so far in 2022 and what to anticipate from potential future changes in expected inflation in the EU, UK and US.

Author

Diana R. Baechle, PhD

Director, Applied Research