This article analyzes the hedging potential of real estate and especially looks at the impact of lease contracts in various countries around the world on the inflation hedge capability for both expected and unexpected inflation. The dataset consists of direct real estate rent and capital value data for 59 cities/MSAs in 25 countries between 1991 and 2020 to make international comparison over a long time period possible. The results indicate that real estate is a good hedge against inflation, and especially against unexpected inflation. The inflation hedge capability of real estate is better for income than for change in capital value, as rent contracts are adjusted for inflation. Countries with graduated rent and revaluated rent contracts have the most positive relationship with inflation. The analysis of the lease length confirms that real estate is a better hedge against unexpected inflation, but increasing the lease length does not seem to have a positive influence on the hedge capability against unexpected inflation.