TORONTO, Jan. 14, 2025 /CNW/ - There are significant opportunities in global public real estate (REITs), according to Hazelview Investments' 2025 Global Public Real Estate Outlook Report, (the "Report). Serving as a compass for investors, the "Report" points to significant opportunities in global REITs, underscoring that robust market fundamentals and attractive valuations will prevail, despite a complex global economic backdrop.
"The global REIT market has reached a pivotal moment, demonstrating resilience and potential for substantial gains," said Corrado Russo, Chief Investment Officer & Head of Global Securities at Hazelview Investments. "With strategic active management and a keen focus on sectors poised for growth, 2025 presents an expansive landscape for investors."
The Report, which can be read in full here, includes the following highlights:
2024 Market Overview:
- After a slow start to the year, global REITs rallied in the second half of 2024 as major central banks began to cut their policy rates and investor sentiment improved towards the asset class. However, in December, a more cautious stance from the Federal Reserve regarding the pace of rate cuts in 2025 led to a pullback, erasing some of the year-to-date gains. Despite this, REITs still closed the year in positive territory with a mid-single-digit positive return.
- Notably, the U.S. and Australia led regional performances, while sectors such as healthcare and data centres saw significant outperformance, benefiting from heightened demand and limited supply.
Continued Strength in Fundamentals:
- REITs are benefiting from high occupancy rates and constrained supply across core property types, which is expected to continue into 2025.
- The strategic reduction of leverage in recent years has positioned REITs advantageously for the current economic climate, allowing them to capitalize on their lower cost of capital for strategic acquisitions and debt management.
Outlook & Valuations:
- Currently, global REITs are trading at their most favourable valuations relative to global equities in decades, offering an intriguing entry point for investors.
- On an absolute basis, Hazelview's analysis suggests that REITs are still undervalued compared to their intrinsic value, highlighting a significant potential for returns.
Key Investment Themes for 2025:
- Global Data Centres: Driven by digital transformation and AI, demand for data centres is expected to surge.
- Senior Housing in North America: An aging population and limited new developments make this a key area for growth.
- Hotels in Japan: With tourism recovering and new hotel supply steadily declining this sector is well positioned for outperformance in 2025.
- Commercial Real Estate Brokers: Set to benefit from increased transaction volumes and a trend towards the outsourcing of property management services.
- Residential Real Estate in Australia and Germany: Strong rental growth and supply-demand imbalances present opportunities.
What role do Canadian REITs play in global real estate allocation this year?
Canadian REITs, particularly in the senior housing sector, are poised for strong growth in 2025, driven by powerful demographic trends as the 80+ population is projected to grow at a 4.8% CAGR through 2042. Constrained supply and rising demand are expected to push occupancy rates above pre-pandemic levels, supporting solid earnings and cash flow growth. Additionally, Canadian senior housing REITs have a cost-of-capital advantage, positioning them to capitalize on accretive acquisitions and outperform the broader public REIT market.
Hazelview's portfolio managers are optimistic about 2025. "We are prepared to navigate through the complexities of the current economic environment to identify long-term growth trends," stated Samuel Sahn, Managing Partner & Portfolio Manager. "Our commitment to active management allows us to adapt swiftly and effectively, ensuring sustainable success for our partners and clients."
To read the report, please visit the Hazelview Investments website.
About Hazelview Investments:
Hazelview Investments is an investor, owner, and manager of global real estate investments committed to creating value for people and places. We are an active investor, with a hands-on team that identifies opportunities to invest globally. We are committed to fostering the long-term growth of our employees, residents, and the investments we make for our clients. Our global investment and asset management team of more than 80 are located in Toronto, New York, Hong Kong, and Hamburg. To learn more visit www.hazelview.com.
SOURCE Hazelview Investments
For additional information, contact: Andrea Chrysanthou, APR, Amplify, [email protected], 416-797-8194
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