Growing fears about the impact of AI widened the gap between winners and losers on the stock markets in the first quarter of 2026. Shares of listed real estate companies (REITs) are among the beneficiaries of this ‘AI immunity trade’, as a new white paper explains.
Growing fears over the disruptive impact of artificial intelligence (AI) have widened the gap between the winners and losers on the stock markets in the first quarter of this year. Listed shares of real estate companies (Real Estate Investment Trusts, REITs) have been among the winners of this ‘AI immunity’ trade in the first three months of 2026, as figures show.
There are three key structural reasons for this, which are unlikely to change for the foreseeable future. This is the argument put forward by Hazelview Investments, a global alternative investment manager specialising in property, in a recent white paper. The authors regard capital-intensive sectors in particular, such as commercial property, as largely immune to replacement by AI.
A good start for global REITs
Global REITs still posted double-digit gains in the first two months of this year (before the outbreak of the Iran war), significantly outperforming global and US equities (see Chart 1 and data in the appendix). Although REITs gave up some of this performance during March, they still outperformed equities at the end of the quarter with moderate gains.
Chart 1: Global REITs outperform global and US equities in the first quarter of 2026
Caption: The chart illustrates the relative returns of global and US REITs compared with global equities and the US S&P 500 index for the period from 1 January to 31 March 2026 in US
In recent months, it has become clear that the risks posed by AI to entire business models and thousands of jobs – whether in software applications for the retail sector, telephone customer service or even in high-level office roles such as those held by lawyers, tax advisers and financial firms – are having a direct impact on share prices and companies’ profit forecasts.
As part of this reassessment, investor capital is increasingly shifting towards sectors with business models and cash flows that appear to be immune to this influence, or at least better protected against it. The phenomenon is referred to as ‘AI immunity’ or ‘HALO’ (‘Heavy Assets, Low Obsolescence’), meaning ‘capital-intensive assets, low depreciation’.
REITs were among the winners of this rotation, at least in the first two months of this year (see Chart 2).
Chart 2: Which sectors of the S&P 500 delivered the best performance in February 2026
Caption: The chart shows that property companies in the S&P 500 were among the top performers prior to the outbreak of the Iran war (Source: Bloomberg LP as at 28 February 2026).
“However, this development should not be misinterpreted as a major rotation away from AI,” explains Claudia Reich Floyd, Head of Hazelview’s European office in Hamburg and one of the authors of the white paper. Even areas within the property sector with a direct link to the AI industry, such as data centres, which have growing space requirements, performed very well.
“Investors seem to be distinguishing between companies that benefit directly from AI and those business models that could be more significantly affected by AI-driven structural changes,” said Reich Floyd.
Last year, the REIT experts had already published their special report, “The Rapid Rise of Data Centres in the Digital Age”.
Three structural factors protect REITs in the AI era
The experts at Hazelview conclude that there are three key structural advantages in particular that have so far shielded REITs from disruptions and price declines in the AI era:
1. Listed real estate shares are based on contractually defined property rights. This often means long-term tenancy agreements, regular, predictable rent payments including fixed rent increases and provisions for non-payment. “And although there is, of course, competition amongst landlords, there is no comparable AI-related threat to the underlying business model itself,” says Sarah Ekho, Associate and co-author.
2. Commercial real estate in particular benefits from a shortage of space and supply chain issues that cannot simply be ‘programmed away’ by technology. Demand, particularly in the logistics sector, far outstrips supply. ‘It comes as little surprise that the profession of landlord is not among the jobs threatened by AI,’ remarks Ms Reich Floyd.
3. Even in an increasingly digital economy, major categories of demand continue to be driven by physical factors – people need somewhere to live, goods need to be stored and distributed, and many retail formats remain dependent on local shops.
Against this backdrop, the authors argue, listed property offers a business model whose core value proposition appears to be more resilient than that of many other sectors currently exposed to the risk of disruption from AI.
Ms Reich Floyd puts it more bluntly in her conclusion: “For AI to fundamentally undermine the REIT model, it would have to significantly reduce the demand for space itself or prevent a landlord from using that space profitably.”
