One way of approaching this issue is to consider historical returns. This approach will produce a wide range of answers depending on which asset classes are considered and which time periods are taken into consideration. As an example, an investor who purchased an apartment in Hong Kong in 1996/7 may well still be sitting on a capital loss. In contrast, an investor who purchased in 2003 would have experienced significant appreciation as well as an increase in rent.
While there can be no certainty, equity markets in many countries have managed to provide total returns (dividends and capital appreciation) in the range of 8-12 % pa in nominal terms (before tax). Part of that return has been a result in an increase in price earnings ratios (or other valuation criteria) and commentators have pointed out that there has to be at least some doubt as to whether that trend can continue (or may even be reversed).
Real estate is harder to evaluate, but it seems reasonable to proceed on the assumption that real estate should return an amount equal to its yield plus the rate of inflation. In Hong Kong's current market this would suggest ungeared returns of 7-8% per annum. Historically, the rates of return have varied considerably from this indicative figure, largely by reference to market conditions in the years following the time of purchase. General price inflation is clearly not a complete explanation for property price movements.
A different way of looking at the problem is to work out what rate of return would be required to achieve a financial position whereby the real value of my savings would not decline during my retirement. Putting my current assets, expected savings between now and retirement, the number of years to retirement, my life expectancy and expected annual expenses into one of the many retirement calculators available on the internet shows that a rate of return on investments of about 6.6% per annum is needed to achieve a position where the real value of my retirement savings will not decline after I stop working. Obviously, the numbers can be played with but I tried to be as realistic as possible.
What this effectively means is that I should be looking to achieve a return of at least 6.6% per annum on my investments after expenses and taxes. Any investment which earns less than this is underperforming. Any return above the 6.6% threshold is outperforming. Leaving aside the observation that 6.6% is a fairly low rate of return, this has important implications for portfolio construction and management.