British REITs have experienced a strong rally since DecemberSince December 2023, British REITs (real estate investment trusts) have experienced a strong rally and recovery in their prices and valuations. Here are the key points:The FTSE EPRA Nareit UK Index, which tracks British listed REITs, posted a total return of 18.9% in the final quarter of 2023, significantly outperforming the broader FTSE All-Share Index. This rally was driven by the market pricing in an increased probability of interest rate cuts in the second half of 2024, as inflation data improved and peak rates were expected to have been reached.Listed British REITs returned 11.9% in November 2023, which was the 5th best monthly performance ever for the asset class. This rally continued into December, with REITs returning 6.2% through December 13th. The strong November and December performance marked a turnaround after several months of declines in the autumn of 2023.As of mid-May 2024, the market capitalization of the British REIT industry stood at around £15 billion, recovering from lows of around £12.3 billion in February 2024. However, valuations remain depressed compared to historical levels, with the industry trading at a price-to-earnings (P/E) ratio of 14.4x as of May 20th, 2024.The recovery in REIT prices has been driven by expectations of a "soft landing" economic scenario, with real interest rates declining, stable credit spreads, and mid-3% net operating income growth for REITs in 2024. Analysts project total returns of around 13% for British REITs in 2024 under this scenario.In summary, British REITs have staged a strong comeback since December 2023, buoyed by improved economic conditions and the prospect of interest rate cuts, though valuations remain below historical averages.