RBC The research team at RBC Capital Markets published their first-ever global real estate outlook which begins with a summary and top picks,
“In our inaugural global report, we summarize the outlooks of our Canadian and U.S. real estate research teams for 2024. While real estate fundamentals are driven by local market conditions, we see several parallel themes that will likely heavily influence returns in both markets. Indeed, as recent weeks have showcased, rising anticipation of a shift to monetary policy easing in 1H/24 and stabilizing (or ideally falling) yields at the long-end of the curve could provide further stimulus for sector fund flows and valuations. Laggards will likely continue to play some catch-up. Still, our global best ideas are anchored in subsectors where we expect operating fundamentals to exhibit resilience amid a decelerating economy and high-quality, yet discounted names facing temporary headwinds. Namely, our basket includes COLD, DIR, FR (Canadian and US industrial), CSH, VTR (Canadian and US seniors housing/healthcare), KMP (Canadian multi-family), TCN (US single-family rental), and MHC (US manufactured housing) … After a year of mixed performance for Canadian and US REITs, we believe the macro picture lines up well to support healthy returns in the year ahead. Our constructive outlooks use RBC Economics’ 2024 forecasts as our base case, including a decelerating North American economy, both central banks pivoting to rate cuts in Q2/24, and stabilizing long bond yields. Notably, REITs tend to perform comparatively well in slower growth environments and ahead of initial rate cuts in easing cycle”