By Rogier Quirijns, head of European real estate at Cohen & Steers
After years of US dominance, global real estate is staging a comeback – reshaping investor expectations and allocations. International REITs are outperforming the US for the first time since 2017, led by Asia and Europe. Discounted valuations, healthy supply and demand, maturing sectors, and supportive policies are driving global real estate’s strong rebound, reinforcing why diversification is essential amid varied macro trends and secular growth drivers.
A global comeback years in the making
Global real estate is on pace to outperform US real estate for the first time since 2017. Through the third quarter of 2025, global REITs were up 10.4%, compared with US REITs, which went up 4.5% over the same period. What’s notable, given that US markets account for over 60% of global real estate, is how strongly Asia Pacific, Europe, and emerging markets have performed. Asia Pacific leads with a 27.4% gain, followed by Europe at 17.9% and emerging markets at 16.2%.
This is in stark contrast to recent history, when the US served as a safe haven while Asia grappled with political turmoil and Europe struggled with slower growth. Over the past five years, US REITs returned 7% annually, while Europe and emerging markets had negative annual returns, and Asia posted just 3.5% returns. 2025 marked a reversal of recent trends. China returned nearly 30% on indications growth has bottomed, and Japan, Spain, Hong Kong, and the Netherlands have all posted returns above 20%.
Importantly, in our view the second half of the 2020s will likely look more like previous decades, with longer-term returns driven by fundamentals, which remain healthy. Historically, US listed real estate annual returns dating back to 1991 show that fundamentals – not sentiment – anchor multi-year outcomes.
From discounted to delivering
Favourable valuations, improving fundamentals, and a positive macroeconomic backdrop are driving the comeback in international markets. Europe and Asia were trading at glaringly discounted valuations at the start of 2025. US REITs began the year trading at a slight premium to net asset values; by comparison, Europe and Asia traded at 23% and 29% discounts. While these discounts have narrowed, international REITs remain relatively attractive.
In Europe and Asia, many alternative sectors with structural and demographic tailwinds, such as increasing demand for data centres and storage to power the AI revolution, and health care to support a growing global population of people aged 80+, are still maturing, creating favourable supply-demand dynamics.
A favourable macroeconomic backdrop, characterised by slowing growth and declining yields, has historically benefited commercial real estate. Falling real yields and elevated inflation expectations have created a particularly supportive environment. As the Federal Reserve resumes rate cuts, listed REITs are positioned to benefit; historically, REITs have performed well in easing cycles. In Europe disinflation has materialised and the ECB has cut interest rates to c2% – the UK should follow at a slower extend and in Asia there is more stimulus expected outside of Japan.
Moreover, REITs have historically outperformed equities following steep multiple discounts. With REITs currently at a –7.7x discount and the historic median at –0.6x, any reversion toward more typical valuation spreads could meaningfully benefit performance. Historically, these periods of deep relative undervaluation have been followed by strong absolute and relative returns as markets normalise.
Outlook for European REITS
In Europe we see that inflation has stabilised at around the target level of 2% and demand and supply are generally positive in most sectors and countries. The UK has lagged the continent more in the disinflation trend and rate cutting cycle but after the latest UK Budget it looks like UK gilts can stabilise and inflation should come down this year in the UK which opens the door for a couple of rate cuts for the BOE – possibly to 3% depending on growth and inflation – we do expect muted growth in the UK. This should help to close the large discounts to NAV in the UK – at c 20% as refinancing costs should come down and investment volumes should start to pick up again.
Within Europe, Spain and Sweden have the best economic growth outlook for 2026 with possibly also Germany starting to benefit somewhat from the 1 trillion fiscal packet. France remains a bit at risk also, but it is still part of the EU and as such we do not see any systematic risk. We do believe that both more cyclical and somewhat defensive sectors do offer opportunities within the different countries on the continent & UK.
The sectors we prefer are retail that offers a relatively high yield with external growth opportunities, logistics with (datacentre) development upside and relatively good income growth potential. We also see self-storage as an attractive entry point for the medium term and we do like some selective office market exposure – like London offices for example.
In sum, the case for listed real estate is strengthening. With global markets rebounding, the second half of the decade reverting to fundamentals, valuations historically attractive, and macro conditions supportive, investors have compelling reasons to revisit allocations and embrace global diversification.
