We are pleased to share our 2026 report, which highlights themes that affected private markets in 2025, and our outlook for the year ahead.
After a rather tumultuous period following the COVID-19 pandemic, broadly speaking expectations for private markets at the beginning of 2025 were to see some degree of normalization. Ongoing trade policy developments emanating from the U.S., most notably in the early part of the year, had the effect of prolonging some of the challenges from prior periods, while the latter half of the year was dominated by questions around the sustainability of artificial intelligence (AI) related valuation levels and the associated capital requirements moving forward.
To be sure, the continued resilience of the global economy and robust capital supply across credit markets have generally supported strong ongoing operating performance across most segments of private markets, and have limited solvency concerns to a few select pockets. Moreover, global fiscal expansion aimed at initiatives such as stimulating infrastructure renewal and development and addressing housing affordability has created a compelling thesis for future investment. Ongoing enthusiasm for AI – and its associated capital and energy demands – along with continued decarbonization efforts and the reconfiguration of supply chains are also creating significant opportunities as well as building valuation and demand pressure points. It is a time when investors with capital are being presented with a broad and deep array of investment opportunities, but must maintain discipline with a view to both investment entry and more importantly, investment exit.
Pockets of constrained transaction activity have created liquidity challenges for certain private market sectors, leaving some capital locked in existing investments and creating a degree of uncertainty around realization timing and valuations. To some degree, the growing secondary market has relieved some of this liquidity pressure, presenting fund investors with an alternative liquidity mechanism, albeit at a discount. We expect the stabilization of inflation and interest rates that began in 2024 and continued into 2025, as well as the normalization of global trade patterns, to lead to increased private market transaction volume and clearer asset valuations. Liquidity management will continue to be a major theme for investors and capital allocators, potentially leading to a reconfiguring of private market portfolios to better align liquidity needs with the profile of investments.
Performance dispersion also remained a key feature of private markets during 2025, with outperformance coming from higher-quality assets capitalized with supportable debt levels. Faced with a potentially softening economy and lingering valuation uncertainty in public markets, we expect quality to continue to outperform over the medium term. Private lending markets have grown very quickly over the past two years, and there has been some evidence of stress for those private lenders that have focused on higher-risk lending segments while also relying on the debt markets to fund their investment programs. In contrast, secured credit investments like commercial mortgages offer investors the ability to achieve stable income returns with greater downside protection compared to traditional private lending strategies.
In summary, a variety of impact-level factors are creating an interesting but mixed backdrop for private markets heading into 2026. We expect investors will see an abundance of investment opportunities, along with clearer valuations and increasing transaction activity, but will need to stay very disciplined when allocating long-term capital. Those private assets that are able to sustain strong ongoing performance will likely see increased valuations as sentiment improves and capital rotates out of sectors that are perceived to be over-valued. The path to returns may be subject to some variability as the global economy adjusts to a seemingly new construct, but for long-term investors, the entry point for selective new investment opportunities appears attractive.
The full report features three key sections covering real estate, infrastructure, and commercial mortgages. Read more about the themes that affected these asset classes over the course of 2025, our outlook for the year ahead, and our investment approach here.