Money moves in strange ways during a crisis. You'd think wealthy investors would rush to cash. They don't. Many shift toward hard assets that produce cashflow and sit out volatility without breaking a sweat. Private equity real estate, farmland and timberland are favorites right now. They combine real economic use, low correlation with public markets, inflation protection and time horizons measured in decades not quarters.
Private equity real estate investment appeals when public markets don't
Private equity real estate gives wealthy investors control over physical property while capturing upside beyond listed REITs. During credit squeezes and equity selloffs, PE managers can buy assets at discounts, restructure leases and time capital improvements for the recovery. The illiquidity that scares retail buyers appeals to the cash-rich who can lock capital into strategies measured in years not days.
Returns for closed-end real estate funds remained negative with a pooled IRR of negative 1.1 percent through the third quarter of 2024. That sounds bad. But institutional studies show private funds can outperform if they buy during troughs and hold through recovery. The trick is having the liquidity to wait and the patience to compound through multiple cycles.
There's regulatory pressure too. Private equity firms now own more than 500,000 homes in the US, and some estimates suggest they could own up to 40 percent of the single-family rental market by 2030. New York Governor Kathy Hochul proposed legislation requiring a 75-day waiting period before institutional investors owning 10 or more properties can make offers on one or two-family homes. That regulatory scrutiny may shift capital toward commercial property, land and timber instead of residential.
Farmland feels like a refuge because it produces food every season
Farmland has a quality few assets match. It's finite, productive and generates cash every growing cycle. Rents, commodity demand and the basic need for food give it a defensive profile. After 2008 and again during high inflation periods, institutional funds increased farmland allocations because it generates cash and keeps pace with price growth.
Farmland values in the United States grew an average of 8 percent in 2023, with global agricultural land investments projected to surpass 50 billion dollars by 2025. That steady yield makes farmland emotionally and financially comforting to millionares who want less headline noise. The USDA reports pastureland values have risen steadily every year since 1997, with a 5.2 percent increase in 2024.
The math matters. Farmland offers investors healthy returns around 11.5 percent per year according to USDA data, combining price appreciation and ongoing passive income from rental and crop payments. Unlike stocks, demographic trends drive value. As long as population grows, farmland scarcity should push values higher.
In Canada, farmland values rose 9.5 percent in 2021 and 14.6 percent in 2022, then continued increasing at an annual rate of 15.5 percent in 2023 despite cooling inflation. The lag effect as price benchmarks adjust to validated market transactions means farmland can sustain value even when other assets stumble.
Recent moves by billionaires reinforce this trend. Climate change, asset diversification needs and geopolitical uncertainties are driving ultra-wealthy investors toward farmland as a safe haven that outperforms stocks and bonds in volatile times. The combination of food security concerns and inflation-resistant characteristics makes these investments practical not speculative.
Timberland and forests grow regardless of headlines
Timberland seems counterintuitive until you examine the mechanics. Trees grow whether markets rise or fall. Timberland produces periodic harvest cashflows, biological growth contributes to total return and correlation with stocks and bonds runs near zero. Research from forest agencies shows timberland acts as an inflation hedge while offering portfolio diversification.
In the US, timberland returns were up 7 percent in 2024, split between strong capital appreciation at 5 percent and income return at 2 percent, marking the third consecutive year the industry outperformed both real estate and farmland. The National Council of Real Estate Investment Fiduciaries claims annualized total returns of 10.74 percent for its Timberland Index since inception in 1987 through the end of 2021.
Multiple income streams reduce risk. Timberland generates cashflow via timber harvesting, land leases and carbon credits through carbon sequestration, with forests absorbing atmospheric carbon dioxide that can be sold as credits to companies seeking to offset emissions. That diversity helps investors handle volatile market conditions and seize carbon trading opportunities.
Biological growth provides the foundation. Trees increase in volume through size gains but also grow into higher-value products as volume expands. This growth is predictable, moves in one direction and operates independently of economic factors. That's why timberland has had a higher Sharpe ratio at 0.79 compared to the S&P 500 at 0.53 since 1990, with less than half the volatility.
The asset class keeps attracting capital. Capital raised by timberland-focused funds almost tripled between H1 2019 and H1 2025, including major funds such as BTG Pactual Brazil Timberland Fund II at 1.24 billion dollars and Stafford International Timberland Fund IX at 695 million dollars. That growth signals institutional confidence in long-term prospects.
Buy-and-hold is more than stubbornness
For illiquid real assets, time turns volatility into compounding. A buy-and-hold stance lets investors wait out cyclical price troughs and capture full recovery, benefit from rental growth and lease resets and compound biological or land value increases over decades. Academic work on these strategies shows long-run advantages for low-turnover assets.
Illiquidity forces discipline. Private real estate funds lock capital for years. That reduces panic selling at market bottoms. For wealthy investors, the downside is manageable because they can tolerate capital lockup. Private managers structure covenants and preferred returns to protect limited partners during stress periods. The payoff is access to discounted acquisitions and outsized gains on rebound.
Liquidity pathways exist even in illiquid assets
One frequent concern centers on the lockup. If you're buying with a multi-decade mindset, you accept capital won't trade like public stock. But wealthy investors use several tools to retaine optionality and access cash when needed without abandoning the long horizon.
Secondary markets let buyers and sellers trade existing stakes in private equity funds and real estate portfolios. Real estate secondaries currently represent only about 1 to 2 percent of global secondaries transaction volume but are growing. If you hold a private fund stake and need liquidity, you might sell part of your position via secondary transaction without affecting the remaining investment.
Recapitalisations offer another path. Instead of selling underlying assets, the general partner can create continuation vehicles that allow existing investors to cash out a tranche while holding the asset longer. This approach is increasingly common for land, forestry and long-term real estate, giving liquidity while preserving anticipated upside.
Refinancings and loans against assets provide flexibility too. Once property or land appreciates and generates cashflow, investors can take out debt to unlock capital while retaining ownership. Because they expect long-term compound growth from trees or land appreciation, they keep upside while raising liquidity.
Some private vehicles offer periodic redemption windows or incremental buyouts for investors wishing to exit, often at a discount. Funds may be structured with limited liquidity each quarter for a percentage of net asset value. This offers an exit path for patient investors who need partial liquidity.
How these assets behave during crises
Below is a comparison that millionaires and advisors use when deciding where to shift capital as markets wobble. The table contrasts private equity real estate, farmland, timberland, public REITs and equities.
Practical reasons millionaires choose these allocations during crisis
Balance sheet flexibility matters. They often own diverse holdings and can fund long lockups without distress. Preservation of purchasing power ranks high too. Assets tied to physical production or replacement cost tend to hold real value better than nominal cash sitting idle.
Tax efficiency sweetens the deal. Real assets offer depreciation schedules, like-kind exchanges in some jurisdictions and harvesting flexibility that can be tax advantaged. Many states in the US incentivize farmland investment by offering reduced property taxes. That reduces drag on returns over time.
Psychological comfort plays a role. Owning land, timber or whole buildings feels tangible. That emotional factor matters when markets get frightening. Reporting on recent buying trends shows funds and wealthy individuals increasing land and timber allocations after sharp market turns.
What millionaires should monitor
Leverage amplifies returns but also accelerates losses during stress. Conservative loan-to-value ratios stay prudent across cycles. Local risks vary by asset. Farmland depends on weather and regulation. Timberland faces vulnerability to fires, pests and changing wood demand.
Liquidity needs deserve attention. Even wealthy investors should maintain liquid cushions. Locked capital works fine until emergencies hit. Manager quality determines outcomes in private deals. Operations and exit timing separate winners from losers.
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Bottom line
When the world tilts, millionaires buy time as much as assets. Private equity real estate, farmland and timberland offer slower steadier returns, lower correlation with public markets and useful inflation protection. For those who can wait, buy-and-hold trades daily noise for decades of compound growth, seasonal yield and the comfort of land underfoot.
The strategy isn't passive in any romantic sense. It's intentional. As GPs look for ways to increase net operating income in current environments, investors with operational capabilities and expertise are taking market share from capital allocators. That suggests active management matters more now than before.
The numbers back this up. Over the past few decades, timberland investment has delivered historical returns averaging 10.9 percent annually over 37 years, greater than commercial real estate, corporate bonds and even gold. Timberland shows a strong positive correlation of 82.3 percent between US timberland returns and inflation, with regression R-squared of 67.7 percent indicating more than two-thirds of return variation can be explained by changes in inflation.
For farmland, the track record speaks clearly. From the first quarter of 2007 to the fourth quarter of 2009, farmland returns were up nearly 30 percent while equity and real estate both fell by double digits. That defensive quality combined with steady income generation makes farmland attractive in uncertain times.
