Overview
UBS’s Chief Investment Office issued a thematic note recommending investors allocate to real assets—specifically commodities, infrastructure and property—through 2027, arguing that artificial intelligence (AI) will intensify demand for data centres, electricity and power‑related infrastructure.
Asset Class Outlook
The broker defines real assets as physical holdings whose value derives from intrinsic characteristics and real‑world use, encompassing property, power and digital infrastructure, and commodities across energy, metals and agriculture. UBS highlights that electrification, heightened energy security concerns and supply‑chain realignment are expected to stimulate spending on power generation, industrial capacity and broader infrastructure, thereby supporting industrial commodities and infrastructure assets.
Property Outlook
Development activity has declined across many property sectors, constraining future supply. UBS identifies data centres, senior housing, multifamily housing and high‑quality office space as particularly well‑positioned, noting that the scarcity of new supply should underpin both pricing strength and rental growth.
Gold Outlook
Gold is treated separately; fiscal uncertainty, geopolitical shocks and lingering inflation concerns could sustain demand for the metal as a store of value and hedge. In UBS’s base case, continued AI‑related spending may favour commodities and infrastructure, while gold could underperform if fiscal and geopolitical risk premiums diminish. Conversely, a sharp reversal in AI spending could weaken cyclical commodities and energy, yet gold might retain appeal if real yields decline.
Risks and Considerations
UBS warns that higher interest rates or tighter financing conditions could depress infrastructure and real‑estate valuations and increase refinancing costs. Slower economic growth may hurt cyclical commodities and infrastructure, and weaker‑than‑expected AI spending could curtail demand for certain commodities. Infrastructure projects also face potential permitting delays, grid constraints, equipment or labour shortages and cost overruns.
Diversification Benefits
The note stresses that real assets should not be viewed as a single “defensive” class because performance varies markedly across sectors and economic environments. Commodities have historically shown low correlation with traditional equity and bond portfolios, while private infrastructure exhibits low correlation with a conventional 60/40 stock‑bond mix.