Globally listed real estate equities (REITs) recorded nine percent growth in local currency in the second quarter of 2026. This development is attributed to an improved economic environment, according to Hazelview Investments, a global alternative investment manager specialising in real estate. Companies reportedly showed increased confidence in investments, lease agreements and financing decisions, as explained by Claudia Reich Floyd, Portfolio Manager for Global Real Estate Equities and Head of Hazelview Investments' European office.
The strongest gains were recorded in the UK at 17.6 percent (in GBP), Australia at 15 percent (in AUD), and Canadian and US REITs at 12.2 percent each (in CAD and USD, respectively). In contrast, Continental Europe showed weaker performance with 3.8 percent (in EUR), Japan with a decline of 4.9 percent (in JPY), and Hong Kong with a minus of 9.1 percent (in HKD). German REITs stood out positively within Europe with an increase of 5.6 percent (in EUR).
Certain real estate sectors delivered above-average returns during the reporting period. These included "Cold Storage" at 37.2 percent, Hotels at 28.5 percent, Single-Family Rentals at 22.3 percent, and Regional Malls with a plus of 17.3 percent, all in local currency. Year-to-date, global REITs rose by 10.6 percent in local currency despite geopolitical uncertainties and rising inflation. In June, listed real estate, with a return of plus 1.9 percent (in local currency), even surpassed global equity indices, which finished at minus 0.7 percent (MSCI) and minus 0.8 percent (MSCI All Country World Index), respectively.
Particularly noteworthy is the development of REITs in the United States, which, according to Sam Sahn, head of Hazelview's New York office, have transitioned from a recovery phase to an early expansion phase. The sector's strength extended beyond data-centric properties to hotels, retail, industrial, and office markets such as New York City. Sahn pointed out that the return of US REITs this year is more than seven percent above that of the S&P 500 index, signalling a significant reversal of previous year's trends. He emphasised that real estate in the right locations and usage types, with adjusted demand, possesses significant pricing power.
In the global REIT portfolio managed by Hazelview for institutional clients, exposures in Australia and the US, particularly in selected office and healthcare properties, contributed positively to performance. Negative impacts, however, resulted from holdings in Hong Kong, Japan, and mobile phone towers in the United States.
In the German market, Hazelview diversified its exposure to residential properties through an investment in TAG Immobilien, in addition to its long-standing position in Vonovia. TAG Immobilien is primarily active in northern and eastern Germany with around 84,000 residential units, and increasingly in Poland with approximately 3,700 new-build flats. Ms Reich Floyd highlighted the positive fundamental conditions of the German residential property sector, as robust demand and limited supply favoured attractive rental growth. TAG Immobilien recently reported solid operating results, reduced debt, lower vacancy rates, and an improved financial forecast including a dividend increase.
