By Belinda Inocco, Head of Private Client at ASK Partners

In recent years, the dominant theme in investment has been volatility, and 2025 is shaping up to be no different. With uncertainty expected to persist, investors are turning to innovative asset classes and new methods of deploying capital to navigate these uncharted territories.

From geopolitical tensions to inflation fears and rising interest rates, investors are grappling with an era where uncertainty reigns supreme. While traditional portfolios of stocks and bonds have long been the mainstay for navigating market turbulence, savvy investors are increasingly seeking innovative asset classes that offer resilience and adaptability. Among these, investing in real estate debt with an option to buy in and out to retain liquidity, has emerged as a compelling choice for weathering market storms.

Real estate has long been a favoured asset class for its tangible value and potential for long-term appreciation. During times of economic instability, we have still seen a steady rise in house prices. However, traditional methods of investing in property, whether through direct ownership or real estate funds, come with significant drawbacks. High entry costs, prolonged transaction timelines, and illiquidity often deter investors, particularly in volatile markets where flexibility is paramount. Recent changes to the tax regime for private landlords and second homeowners have been particularly discouraging.

“As evidenced by the rise of ESG funds and green bonds, investors are increasingly prioritising asset classes that contribute to societal and environmental goals.”

In response to these challenges, property debt investments have gained traction as a flexible alternative to traditional real estate ownership. Unlike holding physical assets, property debt allows investors to lend money against developments, providing exposure to real estate markets without the significant management burdens of bricks-and-mortar ownership and a regular income from interest payments. This approach also offers greater liquidity, enabling investors to diversify their portfolios and adjust their positions as needed.

Innovative platforms like ASK Partners’ digital private wealth solution are at the forefront of this transformation. By introducing a secondary market for real estate debt investments, ASK has so far unlocked £54 million in liquidity for its clients facilitated through 266 transactions across a variety of UK real estate loans, enabling them to trade in and out of their positions with unprecedented ease. This flexibility is particularly valuable during periods of market uncertainty. Liquidity is essential for navigating market volatility and the flexibility to swiftly access capital or adapt a portfolio can provide a significant advantage. This adaptability addresses the limitations of traditional real estate funds, which often restrict withdrawals and impose hefty fees. Indeed, returns can take the form of interest payments, which may be distributed monthly or accrued over time, thereby offering a consistent income stream.

ASK’s platform also offers investors the opportunity to build bespoke portfolios aligned with their individual risk profiles. In response to the evolving interest rate environment and current global economic climate, ASK has strategically focused its lending on income-generating assets across high-demand sectors such as student accommodation, build-to-rent (BTR), co-living, hotels, and residential real estate, plus the post-COVID demand for life-science properties, as an example. This approach offers investors exposure to resilient, in-demand sectors while maintaining the flexibility to liquidate positions as market conditions evolve. Geographic diversification further enhances portfolio resilience. London accounts for 85% of investment opportunities on ASK’s platform, while the Midlands represents an emerging market. This strategic spread helps mitigate localised market risks and ensures a balanced approach to real estate investing. Portfolios can also be spread by risk and returns. For example, lower risk first charge loans will yield maybe 8% whereas a higher risk, second charge loan could yield 12%. Investors have the option to choose what meets their risk profile and spread investments accordingly.

Another avenue for exposure to real estate markets is through Real Estate Investment Trusts (REITs), particularly those focused on commercial properties. Historically, commercial real estate has demonstrated resilience, even in higher interest rate environments. However, traditional REITs share some limitations with other real estate funds, including illiquidity and withdrawal restrictions.

The Financial Conduct Authority’s (FCA) intervention in 2020 highlighted systemic risks in traditional property funds, leading to increased scrutiny and, in some cases, fund closures. These developments underscore the importance of innovative solutions such as a secondary market, which circumvents the inefficiencies of conventional investment vehicles.

Liquid real estate debt investment also aligns with the growing trend toward purpose-driven investments. As evidenced by the rise of ESG funds and green bonds, investors are increasingly prioritising asset classes that contribute to societal and environmental goals. Real estate projects supporting urban regeneration, sustainable development, and innovative sectors like life sciences resonate with this ethos, offering both financial returns and positive impact.

In an era defined by uncertainty, liquid real estate debt investing provides a stable and flexible solution for navigating market volatility. A secondary market can revolutionise the way investors approach real estate, bridging the gap between innovation and tradition. By offering liquidity, diversification, and resilience, liquid real estate debt investments are set to play a pivotal role in the portfolios of tomorrow’s discerning investors.