Q1 2026 Real Estate Securities Outlook

REITs Enter 2026 with Renewed Support

04 February, 2026

 

PGIM reviews the REIT market, analysing regional performance, rates, sector leadership, and opportunities ahead.

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Rate Relief Supports REITs

In the fourth quarter of 2025, global REITs posted mixed but resilient results as markets digested shifting central bank expectations, moderating inflation, and improving fundamentals across several key sectors. Defensive property types outperformed, while data centers continued to benefit from structural demand tied to AI and cloud adoption. Supply remained constrained globally, supporting rental growth outlooks despite macro uncertainty.

United States

  • The U.S. REIT market declined slightly in 4Q25, yet delivered a modest return for full‑year 2025 as fundamentals continued to improve.

  • Valuations remain compelling, with U.S. REITs ending the year well below long‑term averages and supportive of increased private‑market interest.

  • We are overweight senior housing, data centers, industrial, and apartments, driven by strong demographic and technology demand tailwinds, falling construction pipelines, and attractive valuations.  

  • We remain underweight life science–oriented office, gaming, and select West Coast markets.

Europe

  • Despite political and economic uncertainty, European REITs outperformed other major regions for the quarter and ended 2025 on a strong note in USD terms, aided by meaningful currency appreciation.

  • The market continues to trade at large discounts to private valuations, even as private‑market pricing stabilizes and supply remains controlled. 

  • We remain focused on logistics, data centers, select residential, and resilient retail, while maintaining an underweight to secondary offices given elevated vacancy and capex needs.

Asia Pacific

  • APAC outperformed globally in 2025, with Japanese developers and Australian REITs showing strong momentum into year‑end on supportive rate environments and improving fundamentals.

  • Japanese REITs stood out for the year, buoyed by rising rents, strategic buybacks, and optimism around future DPU growth. 

  • We are overweight Japanese developers, Australian retail and residential, and Singapore retail, while underweight J‑REITs, favoring logistics and residential over sectors lacking clear catalysts.

Looking ahead to 2026, we see a constructive backdrop for global REITs. Attractive valuations, stabilizing interest rates, and sharply reduced construction pipelines create a favorable setup for earnings‑driven returns. Private capital interest is rising, with the potential for increased M&A activity as public‑market discounts persist. We expect leadership from data centers, senior housing, logistics, and select retail, while maintaining disciplined selectivity in office, life science, and trade‑exposed sectors.

Read on for the latest REIT market insights.

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References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.

 

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