Global Listed Real Estate: Outlook 2026
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Article Type
Insights
Topic
Real Estate
Published
January 08, 2026
Read time
5 mins
Authors
Boudewijn Schoon
Boudewijn van Loen
Joost Kuipers
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Based on supporting fundamentals and decent valuations we believe the sector is set up to provide for a year of decent high single digit returns, in line with longer term historic averages. Moreover, we believe the defensive and diversification qualities of listed real estate could increasingly be appreciated by investors in order to limit risk of potential tech sector volatility in 2026.

Trends unfolded largely as expected in 2025

Global real estate trends have continued their positive trajectory into 2025, as anticipated. Key trends include a clear bifurcation in performance between prime and secondary assets, elevated construction costs constraining future supply, and increasingly supportive financing markets. Our economic house view of a cooling—but not collapsing—macro environment proved accurate, prompting further rate cuts in the U.S. This has continued to bolster real estate financing conditions, stimulated some growth in equity issuance, and drove investment activity and asset recycling throughout 2025.

The year 2025, however, also brought its share of surprises. In our 2025 outlook we had taken the view that sectors benefiting from falling rates such as European residential properties and U.S. healthcare facilities, the latter also rebounding from post-Covid lows, would do well. This proved the case for U.S. healthcare. In contrast, the listed German residential sector delivered lackluster returns, following a hawkish shift in Germany’s fiscal policy.

 

We had anticipated continued upward rental pressure for data centers, though we acknowledged that technological innovation could reshape demand dynamics over the longer term. The disruption, however, arrived sooner than expected: the January launch of DeepSeek R1 unsettled assumptions about the dominance of major AI players. Despite this shock, market momentum persisted, and following the tariff-driven downturn in April, equity markets rebounded strongly—led once again by the ‘Magnificent Seven’, which now trade well above pre-DeepSeek levels. Notably, data centers did not share in this recovery and remain below their early-2025 valuations.

 

Our view of a further recovery of the whole physical real estate market however largely materialized. This also translated in continued momentum in performance for the global listed real estate sector when measured in local (underlying) currency. A euro investor has however been less fortunate last year. The strong appreciation of the euro has led to a slightly negative euro return for global listed real estate in 2025.

 

Tailwinds to continue in 2026

For the coming year we expect the tailwinds seen in 2025 to continue worldwide. Financing markets remain supportive and we have already seen an inflection in capital values during 2025. Similarly, fundamentals continued to improve for most asset classes with weakness mainly concentrated in smaller sectors like US Cold Storage and Life Science, Chinese office (and residential), HK convenience retail, and secondary assets in general. Given limited new construction, especially in most of the prime end of the market, the recovery would have room to run.

 

Meanwhile, following a stronger general equity market in 2025, listed real estate continues to be relatively attractively priced. General investor’s positioning is also still below average providing potential for continued momentum once investors come back.

 

Constructive on return outlook and diversification benefits

The setup today has improved versus where we were at start of 2025 with fundamentals further improving, valuations slightly more attractive and technicals remaining strong. We therefore believe expectations for a positive high single digit total return (in local currencies) for the listed real estate sector, in line with historic averages, is justified for 2026.

 

Moreover, given increasing uncertainties, we believe the listed real estate sector could be very valuable in a broader equity portfolio for its classical role of offering portfolio diversification benefits. We have already seen a broadening out of performance across asset classes with the equal-weighted S&P 500 starting to perform in line with the normal S&P 500.

 

The greatest benefit of having listed real estate exposure would however materialize in case of a strong tech related slowdown. To illustrate, during the deflation of the TMT bubble as from the summer of 2000, we have seen a cumulative 69% return over the four subsequent years for global listed real estate versus a negative -20% return for worldwide equity (both in USD).

 

We do not advocate a tech bubble collapse. We do however believe that the listed real estate given absolute return potential and diversification benefit, should remain an important cornerstone of any balanced equity portfolio.

Disclaimer

Authors

Boudewijn Schoon
Senior Portfolio Manager
Boudewijn Schoon is a portfolio manager real estate, responsible for global listed real estate strategies.
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Boudewijn van Loen
Senior Portfolio Manager
Boudewijn van Loen is a portfolio manager real estate, responsible for global listed real estate strategies.
View profile
Joost Kuipers
Portfolio Manager
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