Inflation was the biggest concern among real estate investors in the U.S. in 2022. Approximately 90 percent of respondents in a survey conducted among 72 institutional investors, pension funds, and other organizations worldwide noted that they were somewhat or very concerned with the rising inflation. The fluctuation of the interest rates and the consumption and live work preference changes were the second and third biggest concerns for 86 percent and 71 percent of respondents, respectively. When considering the real estate concerns, the rising cost of materials ranked first.

The average market risk premium in the United States decreased slightly to 5.5 percent in 2023. This suggests that investors demand a slightly lower return for investments in that country, in exchange for the risk they are exposed to. This premium has hovered between 5.3 and 5.7 percent since 2011. What causes country-specific risk? Risk to investments come from two main sources. First, inflation causes an asset’s price to decrease in real terms. A 100 U.S. dollar investment with three percent inflation is only worth 97 U.S. dollars after one year. Investors are also interested in risks of project failure or non-performing loans. The unique U.S. context Analysts have historically considered the United States Treasury to be risk-free. This view has been shifting, but many advisors continue to use treasury yield rates as a risk-free rate. Given the fact that U.S. government securities are available at a variety of terms, this gives investment managers a range of tools for predicting future market developments.

Based on a survey conducted among American investors in May 2022 in the United States (U.S.), 62 percent of the respondents stated that inflation was the biggest risk facing the U.S. stock market in the next six months. This was followed by concerns for geopolitics (Ukraine) and interest rates (Fed policy), each indicated by 35 percent of the respondents.