Real estate investment trusts (REITs) are ending 2025 in that familiar place where markets get interesting: fundamentals looking solid, prices still a bit grumpy, and interest rates finally moving in the right direction for landlords.
As of the latest close on Friday, December 5, the FTSE Nareit All REITs Index slipped a marginal 0.11%, while equity REITs and mortgage REITs diverged slightly: the All Equity REITs Index was down 0.09%, but the Mortgage REITs Index rose 0.38%. [1] In ETF land, the widely followed Vanguard Real Estate ETF (VNQ) finished Friday at $89.88, down 0.11% on the day and about 6% lower over the past year. [2] That’s a textbook “meh” price action masking a much more interesting story underneath.
Here’s how REIT stock prices look right now, what the latest news on December 7, 2025 is telling us, and how forecasts for 2026 could shape the next move in the sector.
1. U.S. REIT Stock Prices: Flat Tape, Cheap Valuations
On the surface, U.S. listed REITs are drifting. Nareit’s daily dashboard shows: [3]
- All REITs Index: 216.11 (–0.11% on December 5)
- All Equity REITs: 761.61 (–0.09%)
- Mortgage REITs: index level 2.60 (+0.38%)
VNQ, which tracks a broad U.S. equity REIT portfolio, is trading just under $90 with a one‑year loss of a little over 6% even after a modest autumn rebound. [4] A smaller, actively managed vehicle, the ALPS Active REIT ETF (ticker: REIT), is sitting around the mid‑$26 level after a choppy but essentially sideways few months. [5]
So prices are uninspiring. Valuations, however, are not.
Public vs private real estate: REITs look “on sale”
A late‑November Nareit study comparing listed REITs with private core real estate funds found two striking things: [6]
- Occupancy: REIT portfolios in apartments, office, retail and industrial have equal or higher occupancy than private ODCE funds in every sector except industrial (where both are still above 95%).
- Pricing: REIT implied cap rates are higher (cheaper) than private appraised cap rates by roughly 80–190 basis points depending on sector, with apartments seeing the widest spread.
Translation: public REITs own comparable, often better‑utilized assets than big private funds, but the stock market is pricing those income streams at much cheaper valuations.
REITs vs the S&P 500: a rare divergence
A separate Nareit analysis in November highlighted how far REIT valuations have fallen behind the broader U.S. equity market. The ratio of the S&P 500’s forward price‑to‑earnings multiple to the equity REIT sector’s price‑to‑funds‑from‑operations (P/FFO) has climbed to about 1.3, well above its long‑term average of roughly 1.0. [7]
Historically, such episodes of multiple divergence (during the global financial crisis and the COVID shock) have eventually been followed by periods where REITs outperformed as valuations converged back toward normal. Past performance isn’t destiny, but the pattern is why institutional strategists keep describing today’s REIT pricing as “value territory.”
2. Singapore REITs: Quietly Having Their Best Year Since 2019
While U.S. REIT prices look stuck in neutral, Singapore-listed REITs (S‑REITs) are quietly putting up some of the strongest numbers in the asset class.
According to the Business Times’ REIT Watch column on December 7, the iEdge S‑REIT Index is: [8]
- Up 9.3% in price year‑to‑date (as of December 5)
- Delivering 14.7% total returns including distributions
- On track for its best performance since 2019
Of the 33 index constituents, 29 have generated positive total returns this year, with the top ten logging more than 20% total returns. Leaders include diversified names such as CapitaLand Integrated Commercial Trust, OUE REIT, Mapletree Pan Asia Commercial Trust and Suntec REIT, supported by stable occupancy and positive rental reversions across retail, industrial and office assets. [9]
Analysts in Singapore credit three main drivers: [10]
- Lower borrowing costs: The U.S. Federal Reserve has already cut policy rates twice this year, in September and October, bringing the fed funds target range down to 3.75–4.00%. Local funding costs have fallen in tandem, with the three‑month compounded SORA dropping from about 3.0% in January to close to 1.25% in early December.
- Improving debt metrics: Several S‑REITs reported double‑digit declines in finance expenses in their latest quarterly results as loans repriced lower and spreads tightened.
- Renewed investment activity: Rating agencies like Fitch expect S‑REIT capex on asset enhancement to rise 20–25% in 2025 as managers take advantage of cheaper capital to upgrade portfolios, particularly in prime logistics, retail and office assets.
Despite this rebound, S‑REITs have still lagged Singapore’s broader equity benchmarks, which have delivered total returns north of 25% this year. Some brokers therefore remain “overweight” on the sector, arguing that its catch‑up potential, long leases and stable cash flows could make it more defensive in any 2026 equity market wobble. [11]
3. Malaysia REITs: Tax Uncertainty Looms Over 2026
Malaysia’s listed REITs (M‑REITs) are facing a very different catalyst: tax policy.
A December 7 report from Business Today warns that the sector’s longstanding 10% withholding tax (WHT) concession on REIT distributions is scheduled to expire on December 31, 2025, with no clear confirmation yet of an extension. [12]
Currently, under the concession regime (YA 2016–2025): [13]
- Resident corporates pay 0% WHT on distributions but are taxed at 24% at their own level.
- Resident individuals and non‑corporate investors face a 10% WHT.
- Non‑resident corporates are taxed at 24%; non‑resident non‑corporates at 10%.
If the concession lapses, many investors—especially individuals and foreign funds—would revert to their marginal income tax rates. Maybank Investment Bank estimates that post‑tax yields could drop by 50–100 basis points, potentially making M‑REITs less attractive than regional peers such as Singapore and Thailand and weighing on share prices. [14]
For now, analysts still assume the concession is likely to be renewed, given its repeated extensions in the past. But until Malaysia’s Ministry of Finance clarifies the rules for YA 2026, that policy overhang is part of the pricing equation for M‑REIT stocks.
4. 2025 Sector Scorecard: Who’s Winning Inside the REIT Universe?
Strip away the headlines and you find a deeply uneven REIT landscape in 2025.
A December market perspectives note from Principal Real Estate highlights that: [15]
- Non‑U.S. REITs and U.S. healthcare REITs have posted the strongest year‑to‑date returns.
- U.S. residential and data center REITs have lagged, despite solid long‑term demand drivers.
CRE Daily’s late‑November briefing adds more texture: global REIT performance in 2025 has diverged sharply by sector, with healthcare and global diversified REITs leading, while certain residential and data‑center names have struggled. Senior housing REITs, supported by powerful demographic tailwinds and constrained new supply, stand out as a particularly interesting bright spot heading into 2026. [16]
A separate October deep‑dive from Brady Martz underscores the same theme: not all REITs are created equal. Office REITs remain pressured by hybrid‑work vacancy, while industrial, logistics, healthcare and many residential REITs still enjoy robust demand driven by e‑commerce, aging populations and chronic housing shortages. [17]
In short: 2025 has been less “bad for REITs” and more “highly selective,” with sector, geography and balance‑sheet strength doing much of the heavy lifting for returns.
5. Interest Rates: The Main Plot Line Behind REIT Prices
If REIT stock prices had a one‑word explanation, it would be rates.
Where we are now
- The Federal Reserve has already delivered two consecutive 25 bps cuts in September and October, taking the fed funds range to 3.75–4.00% and ending its balance‑sheet runoff. [18]
- Fed communication has turned slightly more hawkish on the near term, but not enough to derail easing expectations.
Forecasts going into December’s FOMC meeting are notably aligned:
- Bank of America now expects a 25 bps cut at the December 2025 meeting and two more cuts in June and July 2026, which would take rates down to around 3.0–3.25%. [19]
- A Reuters poll this week found that most economists still anticipate a December cut, even though some policymakers argue the Fed should pause. [20]
- U.S. Bank’s market team notes that futures markets are broadly pricing a policy rate near 3% by the end of 2026, more dovish than the Fed’s own published projections. [21]
Globally, the OECD’s latest outlook suggests that major central banks are likely to finish their rate‑cutting cycles by the end of 2026, with policy rates settling above pre‑pandemic norms to keep inflation in check and debt sustainable. [22]
What that means for REIT pricing
For REITs, lower—but not ultra‑low—rates are a sort of “Goldilocks” scenario:
- Discount rates fall, which helps boost the present value of long‑dated rental cash flows.
- Refinancing risk eases when existing debt rolls off at slightly lower coupons.
- Income spreads remain appealing if REIT yields stay in the 4–6% range while government bonds drift closer to 3%. [23]
The flip side: rates are unlikely to revisit the near‑zero era that turbo‑charged REIT multiples in the late 2010s. PwC’s Emerging Trends in Real Estate 2026 report is blunt that real estate has already gone through an “interest-rate driven repricing cycle” and will now have to navigate sticky inflation and policy uncertainty rather than a simple return to cheap money. [24]
6. Fresh December 7 Analysis: Is a “REIT Renaissance” Coming?
One of the more attention‑grabbing notes this weekend comes from AInvest’s December 6 piece titled “Why REITs Are Set for a Renaissance in a Rate‑Cutting World.” [25] The article pulls together several strands of the 2025 REIT story:
- Independent manager Uniplan projects earnings growth of 4–6% for REITs in 2025, while J.P. Morgan Research pegs growth closer to 3%—still positive, and built on resilient demand in industrial and healthcare assets. [26]
- Despite that, REIT prices have lagged broader equities, creating a wedge between fundamentals and valuations.
- Dividend yields across much of the listed REIT universe sit in the 4–6% range, compared with roughly 1–2% for the S&P 500. [27]
The note uses NNN REIT (a U.S. net‑lease REIT) as a case study: modest mid‑single‑digit funds‑from‑operations growth, occupancy in the high‑90s, a roughly 5.5% dividend yield and an average debt maturity of about 11 years, backed by over a billion dollars of liquidity. [28] In other words, not a growth rocket ship, but an income machine that looks more interesting if discount rates edge lower.
Layered on top of that, J.P. Morgan’s 2026 year‑ahead outlook describes real estate as undergoing a “valuation recovery” after the 2022 rate shock and pandemic‑era structural shifts, with 2026 shaping up as a more constructive year for exits and capital recycling. [29]
Combine these threads and you get the core bullish thesis now circulating through December commentary:
Earnings are growing, balance sheets are healthy, and discount rates are finally falling. REIT prices just haven’t fully caught up yet.
Whether that translates into a true “renaissance” in 2026 depends on how smooth the rate‑cut path is—and how patient investors are.
7. The Risk Ledger: What Could Go Wrong for REIT Stocks?
None of this is a one‑way bet. A few of the key risks that are baked into today’s REIT prices—and could still surprise—include:
7.1 Interest‑rate and macro risk
- The OECD expects central banks to stop cutting by late 2026, leaving rates structurally higher than in the 2010s. [30]
- Nuveen and other macro observers note that the Fed has pushed back against the idea of an automatic December cut and remains wary of easing too quickly while inflation is above target. [31]
If inflation re‑accelerates or growth stays too strong, markets may have to price in fewer cuts than they currently expect—something that would hit the most rate‑sensitive REITs hardest.
7.2 Regulatory and tax shocks
Malaysia’s REIT sector is learning in real time how tax rules can affect equity valuations: the potential loss of its 10% WHT concession could slice 50–100 bps off investors’ net yields and dampen demand from global funds. [32]
Other markets have their own quirks: UK investment trusts, many of which own property and infrastructure assets, continue to trade at double‑digit discounts to net asset value despite record share buybacks, showing that discounts can persist long after boards “do the right things” on capital management. [33]
7.3 Asset‑quality and structural risks
Office REITs remain exposed to hybrid‑work dynamics; some retail REITs still face e‑commerce competition; and data‑center REITs, despite long‑term AI demand, are wrestling with power constraints, rising construction costs and very high expectations baked into earlier prices. [34]
The Federal Reserve’s proposed 2026 stress‑test scenarios also remind banks and regulators that commercial real estate is a classic shock channel: in the “severely adverse” case, the Fed models CRE prices falling roughly 40% from end‑2025 levels by late 2027. That’s not a forecast, but it is a sign that policymakers still see property as a vulnerability. [35]
8. What REIT Investors Are Watching After December 7
Taken together, the latest news, price data and forecasts suggest a simple but nuanced picture:
- Prices today
- U.S. REIT benchmarks and big ETFs like VNQ are roughly flat in recent weeks and still below year‑ago levels. [36]
- S‑REITs are enjoying their best year since 2019, with mid‑teens total returns. [37]
- Select subsectors—healthcare, some global diversified REITs and senior housing—are already in recovery mode. [38]
- Fundamentals
- Valuation & income
- REITs trade at cheaper multiples than both private real estate and the S&P 500, with cap‑rate and earnings‑multiple gaps historically associated with future periods of relative outperformance. [41]
- Dividend yields remain meaningfully above major equity indices and, in many markets, still competitive with investment‑grade bonds. [42]
Key things markets will focus on next:
- The December Fed meeting and 2026 dot plot – whether policymakers validate or lean against the market’s expectation of a steady, shallow easing path. [43]
- Policy decisions like Malaysia’s WHT concession – small changes in tax treatment can have outsized impacts on yield‑sensitive REIT investors. [44]
- REITworld 2025 (Dec 8–11) – Nareit’s annual conference, where management teams and institutional investors will trade views on capital allocation, acquisitions, dispositions and balance‑sheet strategy for 2026. [45]
- Q4 and full‑year earnings – especially guidance on rent growth, lease roll‑overs and refinancing costs in higher‑for‑longer, but not crazy‑high, rate conditions. [46]
9. Bottom Line: REIT Prices Today Reflect Caution, Not Collapse
As of December 7, 2025, REIT stock prices globally sit at a strange crossroads:
- They are not pricing in a crisis—occupancy is high, dividends are being paid, and in markets like Singapore, total returns are already robust. [47]
- They are not pricing in perfection either—valuations still discount real estate’s rate sensitivity, policy risks (like Malaysia’s tax question) and structural challenges in office and certain retail segments. [48]
For income‑oriented investors and asset allocators, that mix—solid fundamentals, discounted pricing, and a plausible path to lower rates—explains why so many December notes describe REITs as a value‑plus‑optionality trade going into 2026.
References
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