Reviewing Listed Real Estate: What Investors Want to Know
In the current market cycle, listed real estate is re-emerging as a compelling opportunity for investors seeking income, growth and liquidity. With valuations reset, earnings gaining momentum, and financing conditions favourable, we believe the sector is well positioned to drive returns. We’ve identified three key drivers underpinning this upturn – and share some thoughts on how investors can position themselves to potentially benefit from the new cycle.
A valuation reset is underway
Over the past five years, global listed real estate has underperformed equities by an estimated ~9 % per annum, leaving REITs trading at deep discounts to their long-term multiples. This presents upside: we believe that the stability of real estate cash flows is undervalued, and multiple compression has been exaggerated.
Listed assets in the U.S. are trading at a 7.2% implied cap rate as of Q2 2025, compared to private markets appraised at a ~4.7% cap rate. Comparisons are imperfect, given the sector differences between private and listed (a higher percentage of next generation assets in listed, including healthcare, technology, net lease and others) as well as the lagged nature of private market valuations.
The earnings engine is revving
Earnings growth expectations are accelerating. Across listed real estate sectors, we see growth potentially accelerating in 2026 to ~5%. Non-U.S. regions have the potential to accelerate more, with strong growth seen in Australia, Canada and Japan. In particular, data centres, private-pay senior housing, net lease, and retail/net lease asset types offer differentiated structural tailwinds.
Listed REITs enjoy capital market advantages
Unlike private real estate players, listed REITs have superior access to debt and equity markets. This capital access enables accretive acquisitions, creating a potential cycle of improved earnings and valuation support.
Global tilt and sector nuances
As 2025 has progressed, investors have begun to reappreciate global (vs. U.S. only) exposures. Today, we still see an opportunity for investing in global real estate over the next five years.
Why do we maintain a preference for global?
We see global growth accelerating at a greater rate (compared to its long-term average) compared to the U.S. Global real estate further trades at a greater relative discount, compared to its own history, versus the U.S. When we aggregate our unlevered IRR analysis across regions, we model a ~13 % annualised total return opportunity globally over five years (versus ~12% or lower for U.S. only).
On sectors, our higher-conviction positions include:
• Retail exposures across U.S. malls, shopping centres
• Net lease real estate portfolios
• Senior housing (private pay) in the healthcare sector
The new real estate cycle is underway: here’s why it matters for investors
The new real estate cycle isn’t beginning, it’s begun, creating a compelling entry point. With valuations reset, earnings momentum gathering, and financing advantages in place, we expect the asset class to lead total returns over the medium term. We further believe that the combination of both listed and private real estate offers the opportunity for strong blended risk-adjusted returns, balanced liquidity and a complementary combination of assets for investors.
Learn more about CBRE Investment Management
For more information on CBRE Investment Management and their funds and strategies visit their website.