As inflation recedes and interest rates begin to stabilise, global markets are entering a more deliberate phase—one that calls for measured allocation rather than reactive defence. In this recalibrated landscape, income, resilience, and sectoral relevance are once again in demand.
Global listed property meets all three.
REITs today are not just yield vehicles; they are entry points to some of the most critical infrastructure underpinning the modern economy—logistics facilities, data centres, rental housing, healthcare properties, and more. And after years of valuation compression, the sector now offers attractive risk-adjusted opportunities for long-term investors.
We touched on the early signs of recovery in our previous article. This follow-up looks forward—at how listed property is evolving beyond the inflation cycle, and why it deserves renewed attention in globally diversified portfolios.
Between 2022 and 2024, few asset classes felt the impact of rising interest rates as sharply as listed property. Global REITs, which rely heavily on debt financing and are often valued on their income yields, came under pressure as central banks around the world raised rates in response to runaway inflation.
The mechanics are straightforward: when bond yields rise, income-generating assets like REITs need to offer higher yields to remain competitive. This pushes down prices. At the same time, higher borrowing costs eat into profit margins and reduce future cash flow projections—leading to further valuation pressure. Even REITs with solid fundamentals and stable tenant bases were caught in this repricing cycle.
But that cycle is now moderating.
Inflation, while still present in some regions, has retreated from its peaks. Central banks have paused or slowed the pace of rate hikes. And the forward-looking nature of markets means listed property is starting to re-rate—pricing in not just stabilisation, but recovery in earnings and distributions as the macro environment normalises.
Crucially, much of the risk is already reflected in current REIT valuations. For investors with a long-term horizon, that creates a favourable asymmetry: downside has been priced in, while the potential for yield compression, rental growth, and sector-specific tailwinds remains.
The result is a sector that’s no longer just healing from past shocks—it’s beginning to show signs of health on its own terms.
In a market environment that continues to wrestle with uncertainty—from subdued global growth to geopolitical friction—one feature is regaining prominence across investor portfolios: dependable, inflation-aware income. This is where global REITs stand out.
Unlike equities, where dividends may be discretionary or cyclical, REITs are built to distribute income. In most jurisdictions, they are legally required to pay out a significant portion of their taxable earnings to shareholders, often quarterly. For investors seeking predictability, that structural characteristic offers reassurance.
What’s more, many REITs operate with lease structures that include inflation-linked escalations. This means rental income adjusts over time—not just preserving purchasing power, but actively passing inflation through to shareholders. In regions like the UK, Europe, and parts of Asia, these inflation-aligned lease mechanisms have helped cushion revenue even during turbulent macro periods.
After the valuation compression of recent years, REIT yields are now offering more attractive entry points:
This renewed income appeal is particularly relevant for South African investors. In a market where local income options are often concentrated in a few asset types, offshore listed property adds a layer of yield diversification that’s globally linked, sectorally varied, and structurally designed for distribution.
While income may be the anchor, growth is the lever—and in the current cycle, REITs offer both.
After several years of price compression driven by macro shocks, global listed property is now emerging from a period of dislocation. Valuations have adjusted. Investor sentiment, while still cautious, is beginning to stabilise. And the fundamental drivers of rental growth, sectoral demand, and balance sheet health are quietly reasserting themselves.
This presents a compelling setup for long-term capital appreciation.
Several dynamics support this shift:
Add to this the potential for yield compression as rates plateau or begin to decline, and the case for growth becomes more tangible. In previous cycles, REITs have tended to outperform in the years following peak rates—not because of speculation, but because of earnings clarity, balance sheet discipline, and a reversion to fair value.
What’s different this time is the nature of the growth. It’s not driven by cyclical consumer spending or speculative cap rates, but by essential services and long-term global shifts.
Listed property is no longer just about shopping centres and commercial offices. The global REIT landscape has evolved—mirroring the transformation of the real economy itself. As we look ahead to the coming years, the most compelling opportunities lie not in traditional categories, but in specialised, high-demand sectors aligned to structural change.
Logistics & Industrial: E-commerce acceleration, onshoring of supply chains, and rising demand for last-mile delivery hubs continue to drive leasing activity and rental growth.
Data Centres & Digital Infrastructure: Cloud computing, AI, and data-heavy services are fuelling rapid demand for data centres and digital backbone infrastructure.
Residential Rental Housing: Urbanisation and affordability constraints are driving demand for professionally managed build-to-rent platforms.
Healthcare & Life Sciences: Ageing populations and medical innovation support long-term demand for specialised healthcare property assets.
Together, these sectors highlight a key evolution: REITs are not just real estate proxies—they’re listed vehicles giving investors access to mission-critical infrastructure that reflects the shape of the future.
In the context of a diversified global portfolio, listed property serves a unique and often underappreciated role. It’s not purely equity, not purely fixed income—and yet, it offers characteristics of both: yield, capital growth potential, and a tangible connection to real-world assets.
Global REITs provide access to real estate markets across continents. Sectoral diversification allows investors to participate in property trends beyond local familiarity.
REITs trade on public markets with real-time pricing, transparency, and institutional governance. This enables active portfolio management, risk control, and efficient rebalancing—without the friction of direct property ownership.
For South African investors, this offers a globally diversified, income-producing, and liquid real estate exposure that complements traditional local investments.
Global listed property has moved beyond recovery—it is evolving into a resilient, income-generating, and future-aligned asset class that deserves renewed attention from long-term investors.
As the dust settles from the inflation and interest rate storm of recent years, REITs are positioned not just to bounce, but to build. Yields are compelling, valuations remain reasonable, and the asset base increasingly reflects the infrastructure of tomorrow’s economy.
Whether you're focused on global income, thematic allocation, or building a more robust offshore foundation, REITs offer a unique intersection of access, performance potential, and portfolio strength.
At Reitway Global, we specialise in navigating the listed real estate universe. With deep insight into global markets, sector trends, and currency dynamics, we help South African investors identify, evaluate, and allocate to property with purpose.
Want to understand how listed property fits into your long-term portfolio?
Speak to our team for guidance tailored to your goals.
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