Global REITs show strong potential in 2025 with resilient fundamentals and attractive valuations
Hazelview Investments’ 2025 Global Public Real Estate Outlook Report highlights significant opportunities in global public real estate investment trusts (REITs).
According to the Report, strong market fundamentals and favourable valuations are expected to continue, even amid complex economic conditions.
Corrado Russo, chief investment officer and head of Global Securities at Hazelview Investments, described the current state of the global REIT market as a “pivotal moment,” with resilience and potential for substantial gains.
“With strategic active management and a keen focus on sectors poised for growth, 2025 presents an expansive landscape for investors,” Russo said.
Global REITs experienced a strong second half in 2024, buoyed by central banks cutting policy rates and improved investor sentiment. However, a cautious stance by the US Federal Reserve on the pace of rate cuts in late 2024 triggered a pullback that erased some earlier gains.
Despite this, REITs closed the year with mid-single-digit positive returns.
Performance varied regionally, with the US and Australia leading in returns. Key sectors like healthcare and data centres outperformed, driven by heightened demand and limited supply.
Meanwhile, Japan’s hospitality sector benefited from a rebound in tourism, while Hong Kong faced challenges linked to economic pressures in China.
High occupancy rates and constrained supply continue to underpin REITs’ strength. Strategic leverage reductions in recent years have enhanced their financial positioning, enabling acquisitions and efficient debt management.
Hazelview’s analysis suggests that REITs are trading at historically attractive valuations relative to global equities, presenting an entry point for investors.
Hazelview’s Report identifies several key investment themes:
- Global Data Centres: AI and digital transformation are driving demand, alongside supply constraints.
- Senior Housing in North America: Ageing populations and limited new developments support growth.
- Hotels in Japan: Recovery in tourism and declining hotel supply provide favourable conditions.
- Commercial Real Estate Brokers: Rising transaction volumes and a trend toward outsourced property management drive opportunities.
- Residential Real Estate in Australia and Germany: Rental growth and supply-demand imbalances highlight potential.
In senior housing, strong demographic trends in North America are expected to increase occupancy rates and rental growth, while subdued new development activity creates favourable market conditions.
In Japan, a weak yen and high tourist inflows are boosting hotel performance.
In residential markets, Germany and Australia face structural housing shortages, enhancing long-term prospects for growth.
Samuel Sahn, managing partner and portfolio manager at Hazelview, emphasized the importance of active management in navigating economic complexities.
“Our commitment to active management allows us to adapt swiftly and effectively, ensuring sustainable success for our partners and clients,” Sahn stated.
