2008. Unlike real estate prices, however, rental income hasremained strong. Importantly, rents are more closely aligned with overall inflation than with real estate prices. As investors with long-term real estate holdings wait for the value of their properties to rebound, the rents they garner can deliver an income stream capable of keeping pace with inflation. Indeed, this feature of direct real estate ownership — the receipt of rental income that can reset with inflation — is a valuable benefit.

Taking a real estate stake
The most direct way to reap the rental benefits of real estate is through buying residential or commercial properties chosen for their attractiveness, price and rental prospects. If you do not wish to manage property yourself, real estate investment trusts (REITs) offer an alternative. REITs benefit from rents that rise along with consumer prices. Hence, they offer the same inflation protection as actual property ownership. But because they are bought and sold as securities, REITs offer liquidity advantages over property ownership.