Global markets volatility: Why real estate belongs in your portfolio

The first weeks of 2026 have been turbulent for many investors. On January 20th, the Dow dropped by 870 points. Gold, traditionally a safe-haven commodity, posted its sharpest single-day decline since 1983 and silver crashed 31% in one session. Bitcoin fell 15% from its peak.

These markets all moved together. When everything falls at once, diversification becomes incredibly important…

Want to diversify with real estate? Open the Stake app.

The volatility no one expected

January started quietly, but by mid-month, the CBOE Volatility Index (VIX) briefly surged above 20, its highest level since late November 2025. The S&P 500 dropped 2% in a single day, marking its worst performance since October.

Tech stocks, which carried markets in 2025, suddenly became a liability. Microsoft fell 10% after disappointing cloud growth. Apple and Meta both dropped 8% year-to-date by late January.

What sparked all this chaos?

An unexpected combination:

• Japanese government bond yields spiking to 4% for the first time in decades
• Geopolitical tensions around Greenland
• US Federal Reserve uncertainty
• Rising oil volatility

Even commodities that investors saw as safe turned volatile: for example, gold reversed sharply.

The problem with correlated assets

When you hold only stocks and bonds, you might think you're diversified. However, when real yields shift or geopolitical risk emerges, both can fall together.

That's what happened in 2022, when stocks and bonds both delivered negative returns simultaneously. The classic ‘60/40’ strategy portfolio failed its most basic promise: protection through diversification.

The same pattern appeared in January 2026. Stocks fell, bonds wobbled and precious metals, despite their reputation as crisis hedges, experienced historic single-day crashes. Alternatives like crypto also plunged.

Investors who thought they were protected discovered their portfolios moved in unison.

What moves differently

Real estate operates on a different timeline and it responds to different forces.

Stock markets react to news and sentiment in seconds. A headline about AI spending triggers automatic selloffs. A Federal Reserve comment moves futures quicker than most can react.

Meanwhile, property markets move on fundamentals: supply constraints, population growth, employment trends, lease agreements. These change slowly. In a world that prioritises speed, this exactly what makes real estate valuable.

This is not simply a theoretical concept. Research spanning 145 years shows real estate and equities have low correlation. They don't respond to the same triggers. When stocks sold off in January 2026, rental income kept flowing. Lease agreements didn't change because the VIX spiked.

How professional investors think about this

Major pension funds, managed by professional investors that have to maintain a stable risk profile, see the value in real estate.

That's why institutional investors have dramatically increased their real estate allocations. Pension funds have grown allocations to real estate, private equity, and infrastructure from 12% in the early 2000s to about 20% combined. Leading endowments like Yale maintain 9-11% in direct real estate.

These investors are trying to make sure their portfolios are not overexposed to one market or asset type - because they’re thinking long term.

What this means for you

Real estate diversification makes sense if:

✓ You hold equities and noticed January's volatility

✓ You want income that doesn't depend on market sentiment

✓ You can commit capital for longer holding periods

✓ You understand this smooths returns rather than eliminating risk entirely

It doesn't make sense if:

✗ You need immediate liquidity

✗ You expect real estate to eliminate all portfolio risk

✗ You want to ‘get rich, quick’

Building balance

No one can predict the market. Instead, the goal is building a portfolio that doesn't implode when multiple asset classes fall together.

• Where stocks might drop, but rental income holds
• Where volatility doesn't derail your long-term plan
• Where you can stay invested through turbulence

With Stake, you can add real estate from AED 500.

Ready to diversify? Open the app.

This is not investment advice. Past performance is not indicative of future results. All investments carry risk. This material for educational purposes only and does not constitute financial advice. Stake Properties Limited is regulated by the DFSA as an Operator of a Crowdfunding Platform in the UAE. Past performance is not an indicator of future returns.