BlackRock Alternatives has released its annual outlook for private markets, and although 2023 is expected to bring some turbulence, the asset management firm believes the outlook is one of “cautious optimism.” 

The report, “2023 Private Markets Outlook: A New Era for Investors.”, noted that private assets are set to play a critical role in investors’ portfolios next year, with private equity, private credit, real estate and infrastructure now “uniquely poised” to capitalize on unfolding global trends. 

In private equity, BlackRock expects lower valuations, increased buyout, carveout and M&A activity, and more quality portfolios for sale in the secondary markets.  

In real estate, values are resetting in response to changing tenant demand and higher financing costs, leading to disparate returns among regions, sectors and property types. 

“We expect further asset repricing in 2023, but we believe that investors who can identify the regional and thematic sweet spots will find a compelling opportunity set,” said the report. 

The role of private assets in a portfolio is increasing, the report adds, as they are uniquely poised to take advantage of several significant global trends such as the net-zero transition, expanding technology adoption and demographic shifts. 

“More and more companies are turning to the private markets for their capital and financing needs, enlarging the field of potential investments,” noted Edwin Conway, global head of BlackRock Alternatives, in the report. 

“While we acknowledge the challenges that may come, we’re nevertheless optimistic that a worldwide network of relationships, rigorous selection process and sophisticated risk analytics can deliver the best in private markets for clients, no matter the market cycle,” Conway said.