Insights on Listed REITs Performance and Real Estate Sectors

Listed Real Estate Investment Trusts (REITs) have had a rollercoaster year so far in 2024, with a 6% decline year-to-date. However, despite the rocky start, there have been some positive trends in the market. According to Rich Hill of Cohen & Steers, the market saw a significant uptick in November and December, with returns almost reaching 20% from the low point in October 2023.

Hill also highlighted the diverse performance of different real estate sectors within the REIT market. While office spaces, especially Class B and C properties, are facing challenges due to overbuilding and remote work trends, clean and green office properties are in high demand. Multifamily properties are seen as a promising asset class in the long term, despite short-term headwinds. Industrial properties have underperformed in the listed REIT market but still show strong demand on the private side. Retail properties, on the other hand, are considered under-owned by institutional investors, presenting an opportunity for attractive returns.

Looking ahead, Hill sees opportunities in next-generation property types such as data centers, cell towers, seniors housing, and single-family rentals, which now make up a significant portion of the listed REIT market. He emphasizes the evolving nature of commercial real estate and the potential for new investment opportunities beyond traditional property types.

Despite the current sentiment surrounding commercial real estate, Hill remains optimistic about the market’s health and sees the current sell-off as an opportunity to invest in tomorrow’s valuations. He believes that the best vintage returns often come after challenging market environments like the present one.

Overall, while listed REITs have faced challenges this year, there are still opportunities for investors in the diverse and evolving real estate market.