It seems like a tale of the past, but the U.S. saw record low mortgage rates in 2020 and 2021; concurrently, real estate investment soared. But the tried-and-true adage that real estate investment is a long-term proposition has never been more true today as mortgage interest rates steadily climb. As real estate prices come down and a recession looms, the question of whether now is a good time to invest in real estate takes center stage

Savvy investors understand that real estate has been a consistent hedge against inflation. The low interest rates of a year ago made property affordable at first, but the real estate market adjusted by increasing home values. And now, as interest rates go north of 7%, many buyers are finding themselves priced out of the market.

That situation presents an opportunity for rental property investors who can increase rental rates as home inventory dwindles and buyers, priced out of the market, seek temporary housing until interest rates decline. This model can lead to consistent passive income for investors.

But its all still about location, and investors in rental properties need to be conscious of the economic realities of the geographic area they are buying in. Investors need to be aware of the unemployment in the area of their investment properties, says David Tuyo, CEO of University Credit Union in Los Angeles. You obviously want to hedge your bets that tenants will be able to pay rent as much as possible, told Bankrate.com.

Price is an important consideration when investing in real estate. And while lower purchase prices can generate a more significant return potential, its not the only factor to consider. Mortgage rates still significantly affect the profitability of an investment, and there are potentially more hikes ahead with a recession looming.

Superior returns in real estate tend to follow recessionary periods, according to the latest report from investment advisor Cohen & Steers Capital Management, Inc., which has $88 billion in assets, of which $56 billion is in real estate. The company believes the current market dislocation in the real estate market will likely generate strong returns in 2023 and 2024.

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Listed real estate tends to lead private real estate in both selloff and recovery during recessionary periods, Cohen & Steers said in its report. Differences in the real-time pricing of listed real estate investment trusts (REITs) and private real estate can create significant short-term dislocations. By understanding the leading and lagging behaviors of private and listed markets, real estate investors may be able to tactically allocate at different times across the two asset classes, seeking to take advantage of how markets have priced in current conditions.

As for continued inflation, the report also says that sectors with shorter lease durations, such as self-storage and hotels, can adjust rents quickly to keep pace. These sectors demonstrate greater cyclicality and can serve as a buffer against inflation.

Cohen & Steers report claims the U.S. is heading into what they refer to as an average recession, as measured against recessions over the past 100 years. Our base case is a decrease of 2% to 3% in real global domestic product and a duration of about 12 months.

However, the report is especially bullish about the expectation of superior returns in real estate following these recessionary periods. The result, emerging from this challenging period, may be some strong vintage returns across both real estate categories. However, optimizing a real estate portfolio can be enhanced by integrating both listed and private markets.

As for alternative real estate investment opportunities, Cohen & Steers points to cell towers, healthcare facilities and data centers as emerging secular winners because of tech innovations over the past few years.

Read next: Bezos-Backed Startup Lets You Become A Landlord With $100

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