Reitway Global | Monthly Commentary | November 2023

December 6 2023

  • GPR 250 REIT World Index delivering a substantial return of +10.4% in US dollars.
  • All sectors within the GPR 250 REIT World exhibited positive growth in US dollar terms.
  • November's substantial returns in the GPR 250 REIT World Index signal a potential positive turn for the real estate sector.

Market Commentary

November proved to be a rewarding month for real estate investors, with the GPR 250 REIT World Index delivering a substantial return of +10.4% in US dollars. The remarkable performance was fuelled by a confluence of factors that included lower than expected Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) figures, coupled with unexpectedly robust GDP growth.

These positive economic indicators not only contributed to the REIT sector's impressive gains but also stirred speculation about the potential for earlier-than-expected reductions in interest rates, adding a compelling dimension to the landscape for investors in the real estate market.

All sectors within the GPR 250 REIT World exhibited positive growth in US dollar terms, with Self-Storage (+15.0%) being the standout performer, experiencing a rebound in prices. This came after a prolonged period of underperformance, particularly in the US. Diversified (+13.6%) secured the second position, benefiting from a widespread increase in European, UK, and Australian stocks. Regional Malls (+13.3%) claimed the third spot, fuelled by a robust performance from Unibail-Rodamco-Westfield (URW), which delivered a remarkable +29.2% for the month.

Conversely, the sectors with the least impressive results, although still delivering absolute returns that would satisfy most investors in a single month, included Multifamily (+6.2%), Lodging (+6.9%), and Healthcare (+7.2%).

Regarding geographical performance in November, the leading regions comprised Spain (+22.0%), UK (+18.0%), and France (+17.0%), benefiting significantly from retail and diversified stocks. Conversely, the less favourable regions encompassed Japan (+4.2%), anchored by its low correlation with the rest of the world as interest rates appear to have reached their peak. South Africa (+7.2%) and Mexico (+8.3%) underperformed compared to other regions, following their leading positions in the previous month.

Realty Income’s entry into the data centre sector through a joint venture with Digital Realty reflects a strategic move to capitalize on the growing demand for data infrastructure. By investing $200 million for an 80% equity stake in two pre-leased data centres in Northern Virginia, Realty Income diversifies its portfolio and taps into the lucrative data centre market.

Partnering with Digital Realty, a major player in cloud- and carrier-neutral data centres, enhances Realty Income's position. The joint venture's flexibility to expand capacity up to 48 MW caters to potential future demands, highlighting a forward-looking approach to the evolving landscape.

In November, the Nareit REITWorld conference convened in Los Angeles, and delivered the following key takeaways across industrial, retail and office sectors.


In the industrial sector, the overarching trend indicates a divergence in market rent growth between non-coastal and coastal regions, notably pronounced in the Sun Belt markets. This year, non-coastal markets are expected to outpace their coastal counterparts, reflecting shifting preferences towards onshoring and nearshoring trends. Southern California, particularly in the Inland Empire, faces a moderate decline of 5% to 10% in rents, with slight decreases observed in Los Angeles and Orange County. Despite these recent challenges, Southern California maintains the largest lease mark to market across REIT portfolios, underscoring its resilience.


The strip centre sector appears to have benefitted from a unique advantage stemming from a lack of new supply, positioning it favourably amid near all-time low vacancy rates and high tenant retention rates across the country. According to REIT management, the scarcity of construction loans and elevated construction costs contribute to a deterrent for new projects, potentially creating a substantial tailwind for existing strip centres. The confluence of these factors implies that strip centre rents may need to surge significantly—potentially by 50-100% in many markets—to justify new construction investments.


Despite optimistic sentiments from office REITs regarding leasing pipelines surpassing early 2023 levels, the industry faces prolonged timeframes for lease execution. This extended process has translated into signed leasing volumes falling below 2022 levels. Notably, the dynamics of leasing activity reveal a trend where small and medium-sized tenants are the primary drivers, showcasing more agility in their decision-making.

In contrast, larger tenants exhibit a slower transaction pace, necessitating additional internal approvals and contributing to a reduction in space requirements. The complexities surrounding lease execution and shifting tenant behaviours underscore the continued turbulence in the office sector, requiring adaptive strategies to navigate the evolving landscape.

In Summary

November's substantial returns in the GPR 250 REIT World Index, propelled by positive economic indicators and speculation around interest rate reductions, signal a potential positive turn for the real estate sector. The unique advantages seen in the industrial and strip centre sectors, coupled with industry participants' optimism at the Nareit REITWorld conference, collectively suggest a resilient and evolving real estate landscape. While challenges persist, the potential for sustained growth underscore a positive trajectory for the global real estate industry.

If you would like to set up time to speak to us or for more information on any of our funds please contact [email protected] / 082 676 6115 or [email protected] / 060 587 5086


Although all precautions have been made to ensure the reliability of data and information contained in this presentation, Reitway cannot guarantee the reliability thereof. Past performance referred to in this presentation is not necessarily indicative of future performance. Similarly, forecasts contained in this presentation involve risks and uncertainties which may result in future performance, outcomes and results which differ materially from such forecasts. You are accordingly cautioned not to place undue reliance on any historical data, general information or forecasts used in this presentation.

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Registration No: 2011/125542/07. A Financial Services Provider licensed under the Financial Advisory and Intermediary Services Act, 37 of 2002. FSP license No: 43747. The full details and basis of the awards are available from the manager.

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Collective Investment Schemes in securities are generally medium to long term investments. The value of participatory interests may go up or down and past performance is not necessarily an indication of future performance.  The Manager does not guarantee the capital or the return of a portfolio. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending.  A schedule of fees, charges and maximum commissions is available on request.  BCI reserves the right to close the portfolio to new investors and reopen certain portfolios from time to time in order to manage them more efficiently. Additional information, including application forms, annual or quarterly reports can be obtained from BCI, free of charge.

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Performance figures quoted for the portfolio are from Morningstar, as at the date of this document for a lump sum investment, using NAV-NAV with income reinvested and do not take any upfront manager’s charge into account.  Income distributions are declared on the ex-dividend date. Actual investment performance will differ based on the initial fees charge applicable, the actual investment date, the date of reinvestment and dividend withholding tax. Past performance referred to in this presentation is not necessarily indicative of future performance.

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