The prospects for global Real Estate Investment Trusts (REITs) this year and the next year are quite encouraging: According to the “2024 Global Public Real Estate Outlook Report” by Hazelview Investments, listed real estate has the potential for a 22% upside from current market levels; in 2023, the Global REIT Index was up 10.8% (in USD). “As we enter 2024, we believe REITs are ready to take off after two years of sitting on the runway”, comments Claudia Reich Floyd, global real estate portfolio manager and head of the German office of Hazelview Investments, on the presentation of the report.
Four reasons why REITs will be attractive in 2024
The report lays out the four main reasons, why REITs will be attractive in 2024, especially in comparison to other asset classes:
* Low valuations relative to public equities: Since the beginning of 2022, REITs underperformed global equities by 18.6%, roughly 13.6% of which took only place in 2023 (source: Bank of America, as of 30 November 2023),
* low valuations to private real estate: The current discount implied between the valuations of public REITs and private market pricing for real estate is 30% (source: FTSE EPRA/NAREIT Global local return index, as of 30 November 2023),
* low valuations on a historical level: Global REITs are presently trading at a nearly 12% discount to their spot net asset value, which is cheaper than their 30plus year long-term average (source: UBS, as of 15 December 2023) and
* relatively low valuations in relation to Hazelview’s own long-term records: Due to the poor performance in 2022 and 2023, REITs are cheap and priced at a 18.1% discount to their intrinsic value (sources: Bloomberg, Hazelview Investments, as of 3 January 2024).
Opportunities in sub-sectors like European logistics
Looking forward to this year, the real estate experts see investment opportunities arising in different regions and sub sectors of the real estate market. “Resilient corporate earnings and a rapid decline in new supply will be key for the development of some REITs”, explains Reich Floyd.
For Europe, Hazelview sees a few overarching trends of which especially providers of logistic real estate could profit.
Among them are Belgium company Montea, which has assets primarily in France and the Benelux, and Dutch logistics specialist CTP, which is focused on Eastern Europe. “These firms are high-quality, well developed logistics companies which are best positioned from strong fundamentals in 2024”, Reich Floyd says.
You can find the complete “2024 Global Outlook” document (in German) here.
Hazelview Investments is an active investor, owner and manager of global real estate assets dedicated to creating value for people and places. Hazelview employs a global investment and asset management team of more than 90 people in its offices in Toronto, New York, Hong Kong and Hamburg and manages CAD 12.1 billion (approximately EUR 8.4 billion, as of 30 September 2023) in real estate assets. For further information, please visit the website: www.hazelview.com.
