From discount to opportunity in global REITs

CPD Content

31 March 2026

Global REITs are emerging as a compelling investment opportunity as macro conditions stabilise and market fundamentals strengthen. For Mark Mazzarella, CFA — Head of Real Estate Securities at Dexus — the combination of defensive income, recovering capital markets, and targeted value opportunities points to a positive outlook for the sector.

Mark spoke at the IMAP Independent Thought Conference

In a world of geopolitical tension, deglobalisation, and inflationary pressures, investors are turning to defensive assets. While gold has surged, commercial real estate offers predictable cashflows backed by lease obligations, making REITs a resilient choice. Mazzarella notes that the normalisation of interest rates after the volatility of 2022–2023 has clarified the cost of capital, allowing REITs to benefit from renewed investment activity and value accretion.

Operational fundamentals are equally supportive. Seniors living and retail assets, including Scentre Group’s Westfield malls, are seeing occupancy return to near pre-pandemic levels. In Japan, central Tokyo office vacancies have dropped from 6 per cent to 2–3 per cent, with key sub-markets like Shibuya at just 1 per cent. These trends underpin confidence in earnings growth, even as global GDP slows, with REIT EPS projected to rise through 2027.

A key driver for returns is the closing of fair value discounts — the gap between current market prices and true asset value. Improving fundamentals, earnings inflection, and increased transaction activity are narrowing these gaps. Dexus highlights several “value-affirming transactions” that illustrate this trend:

• Plymouth REIT: Purchased at an attractive cap rate, later privatised, capturing full asset value.
• City Office REIT: A carve-out of an undervalued life sciences portfolio unlocked significant value, nearly doubling the share price.
• Shareholder activism: Urban Logistics REIT merged with LondonMetric Property, while Elme Communities undertook a strategic review to realise intrinsic value.

These examples show how active management in small and mid-cap REITs can generate alpha while reducing the risk of mispricing. Rising deal volumes, mergers, and acquisitions also increase market confidence in asset values, reinforcing the defensive yet opportunistic nature of REIT investing.

For investors seeking stability, income, and value-driven upside, global REITs now offer a unique combination: predictable cashflows from real assets, earnings growth above GDP, and opportunities to capture mispriced assets as fair value discounts close. As Mazzarella notes, the sector is moving from discounted pricing to a market full of opportunity, making it a key consideration for diversified portfolios navigating today’s complex economic landscape.

Mark Mazzarella shared these insights on ‘From discount to opportunities: Value-affirming signals in global REITs’ at the IMAP Independent Thought Conference in Melbourne.

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