In its midyear review, Oxford Economics said that euro zone and US REIT prices would rise in the second half of the year as inflation falls and interest rates peak. We appear to be nudging towards the end of the interest rate hiking cycle, but many uncertainties remain. One of the main concerns is how long interest rates will need to stay in restrictive territory in order to return inflation to target.

Since the mid-point of the year, euro zone REIT prices have grown by around 4 percent, but are still down this year by 7 percent and down 43 percent since 2021.

There is growing belief that the euro zone has the most favourable near-term potential for further price growth. Factors supporting this view include a wide yield spread and larger discounts to NAV, combined with inflation that is expected to return to target quicker than other regions. This should allow interest rates to subside next year.

Global REIT pricing looks to have sufficient headroom, relative to