Global Reits have started 2026 on a firm footing, outperforming bonds and equities, supported by resilient demand, constrained supply across key property sectors and accelerating earnings growth.
However, the conflict in Iran has unsettled markets, with investors pricing in a “higher-for-longer” interest rate environment, driving a sharp rise in global long bond yields.
“The first quarter of 2026 was marked by significant dispersion across listed property sectors, with a wide 37.4% performance gap between the best and worst performers. Data centres led the pack, rising 21.9%, while student accommodation lagged, declining 15.5%,” reads the Sesfikile property investment South Africa & Global listed quarterly commentary.
A similar pattern emerged at a regional level where returns diverged by 19.1%. The US outperformed with a 4.9% gain while Australia lagged, down 14.3% over the period.
According to the Sesfikile commentary, data centre outperformance was driven by robust demand from major technology firms. This was triggered by continued investment in AI infrastructure, as expanding use cases and improving monetisation strengthened tenant demand, underpinning sustained leasing activity and investment momentum across the sector.
The “other” category outperformed, led by Iron Mountain, a diversified real estate and information management group that is increasingly pivoting into data centres alongside its traditional storage and records business. Its shares gained on the back of continued expansion in this higher-growth segment.
Net lease Reits gained, supported by investor rotation into defensive, predictable cash flows amid elevated macro uncertainty. Healthcare Reits also advanced, bolstered by structural demand from ageing baby boomers and constrained senior housing supply.
Student accommodation was the weakest-performing sector, dragged lower by Unite Group after it cut 2026 earnings guidance, citing softer demand that weighed on occupancy and rental growth, the report says.
“The office sector came under pressure, weighed by concerns over AI-driven structural shifts in demand, alongside heightened geopolitical risks and rising fears of a private credit crisis. Multifamily also declined, dragged lower by bond-sensitive German residential names,” according to the commentary.
Despite pockets of weakness, senior housing continues to stand out as the most compelling long-term theme in global listed real estate. Demand is being driven by the rapidly expanding 80-plus age cohort in the US, the fastest-growing demographic group, with steady growth expected to the end of the decade.
“At the same time, supply remains heavily constrained, well below prior peaks, creating favourable pricing power for landlords. This imbalance is translating into solid rent growth and improving occupancy, supporting strong and consistent income growth across the sector,” the report says.
Skilled nursing facilities are also benefiting from these demographic tailwinds, with rent coverage ratios improving to levels not seen in more than a decade.
Meanwhile, the industrial sector entered 2026 on a more stable footing after a period of elevated supply. Structural drivers remain intact with e-commerce expansion and ongoing supply chain modernisation continuing to support demand. US vacancy ended 2025 at 7.5% with demand expected to marginally outpace new supply in 2026, signalling a gradual rebalancing in fundamentals.
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