Global REITs: Mispriced in plain sight what are the opportunities

Given the current macro-environment, Mark Mazzarella (Dexus) believes the imbalance in the supply and demand of real estate is creating opportunities for investors in Global REITs.

Despite global volatility and regional disputes, real estate — including commercial, industrial and healthcare — remains an attractive investment for investors. But talk to Mark Mazzarella, CFA — Head of Real Estate Securities at Dexus — and he will tell you that real estate investment trusts (REITs) are currently mispriced, creating genuine opportunities for investors.

According to Mark, Global REITs are significantly mispriced, trading at rare, wide valuation discounts relative to global equities and below their net asset values (NAV). Despite strengthening operational fundamentals, such as positive rent growth and low supply, REITs have underperformed general equities for four consecutive years

He points to a number of positive signs for real estate, both from a top-down and bottom-up perspective, that positions the sector well for future growth. From the top-down, Mark refers to a stabilisation in interest rates post-COVID in most developed markets (excluding Australia). This has seen a normalised cost of capital for real estate investing in developed markets, like the United States.

However, speaking at the 2026 IMAP Portfolio Management Conference in Sydney on the topic ‘Mispriced in plain sight: The case for an allocation to Global REITs’, it’s the bottom-up that Mark is most excited about in relation to the sector’s prospects.

He says that’s because markets are coming out of a period post-COVID where the cost of building or developing property has increased exponentially, making it extremely difficult to bring new space online. It’s also a similar thematic globally across the built-form market (the market for completed, ready-to-use buildings—such as retail spaces, offices, or residential units).

By Jayson Forrest

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But one sector of real estate — data centres — is bucking this trend, having brought on supply of any note over the last few years.

“So, the demand/supply dynamics are some of the strongest Dexus has seen, particularly in some sectors like seniors living,” says Mark. “And this creates opportunities for investors.”

It’s not surprising that against this backdrop of a supply/demand imbalance and normalised cost of capital (in most developed markets) that the growth features of real estate looks particularly attractive. This is due to the earnings of real estate being effectively driven by rents that are indexed to inflation or fixed on a per annum basis, which is a powerful driver of the sector’s bottomline.

“In terms of relative valuations, we also have historically wide discounts on global equities compared to REITs on a ‘price to cashflow’ and ‘price to book’ value basis (valuation metrics used to determine if a stock is over or undervalued). So, for a sector that is underpinned by brick-and-mortar real estate that you can touch and feel, and with visible earnings growth, it’s another signal that the real estate sector is mispriced,” says Mark.

“Given that the REITs sector is relatively small globally, and has been lagging global equities, the sector has still been able to deliver the types of returns you’d expect from a liquid real asset class of around 8-12 per cent, which is very attractive.”

According to Mark, there is genuine momentum in earnings growth in real estate, mainly due to the sector’s key attributes, like the supply/demand imbalance and quality of property. For example, the Dexus Global REIT Fund has a weighted average three year earnings compound annual growth rate (CAGR) of around 6-7 per cent. Given current global uncertainty and volatility, Mark says this CAGR shows the resilience of the sector’s earnings growth.

As an asset class, Mark believes real estate provides genuine portfolio diversification benefits to investors, particularly when considering that many of the major equity indices are heavily weighted towards the ‘Magnificent 7’ (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) due to their market-cap-weighted structures. As of early 2026, these seven stocks accounted for approximately 30–35 per cent of the S&P 500’s market capitalisation and nearly 50 per cent of the Nasdaq-100.

Instead, Mark believes that for investors wanting a diversified liquid global exposure that offers attractive returns and are not over-valued, like the ‘Magnificent 7’, then real assets, such as REITs, can act as a powerful diversifier for a portfolio.

However, he acknowledges that many investors typically associate REITs with the likes of retail, office, and industrial — all of which are highly tethered to the business cycle. But he adds investors also have the ability to access a diverse opportunity set in sub-sectors of real estate that are untethered from the traditional business cycle.

One such sector that appeals to Mark is seniors living. He says seniors living has particularly strengthened over the last 18 months, due to a rapidly ageing population.

“You can’t hold back the ‘grey tsunami’,” says Mark. “Rapidly ageing populations in developed markets mean seniors living is an excellent asset class, due to issues around supply and demand. These factors are completely untethered from the traditional business cycle and we believe demand for seniors living will continue unabated. This is a sector where we are seeing tremendous opportunity for investors.”

Another opportunity is with ‘assisted living’, where a supply/demand imbalance enables Dexus to invest into this sector, which has perhaps the best prospects for rental tension seen anywhere in real assets. This rental tension is a key factor for enduring REIT performance in the sector.

Dexus also identifies global data centres, which are benefitting from solid structural tailwinds, as an investible opportunity. However, Mark cautions that as an asset class, data centres are probably one of the biggest obsolescence risks in the real estate sector, due to their value derived not from the structure itself, but from their ability to support rapidly evolving, high-density IT hardware.

“As technology advances, data centres can become technically obsolete — such as unable to cool or power modern AI chips — within a few years of construction, turning expensive assets into stranded infrastructure,” says Mark. “So, we’ve taken a relatively cautious approach to investing in data centres.

“We intend to limit our exposure to select areas, where we’ve got good visibility to an asset being pre-committed or de-risked. Outside of that, we look to invest in businesses like Equinix — a leading American multinational REIT and digital infrastructure company, specialising in internet connectivity and carrier-neutral data centre colocation.”

And despite the momentum of AI and the likelihood of it replacing an increasing number of traditional office-based jobs, Mark believes it’s still too early to say what effect AI will have on the demand for real estate in sectors like office and retail.

“Our belief is there will be a flight to quality, where in sub-sectors like office, the highest quality office assets will continue to lease well.”

Given the current macro-environment, with Global REITs entering a “non-normal, shock-type period”, Mark remains bullish on the long-term prospects of real estate. He says the sector’s fundamentals continue to appeal and cannot be ignored by investors, particularly when considering the sector has come through a period where supply/demand imbalance has been exacerbated by the difficulty of bringing new supply to market.

“In addition, the ability for real estate to maintain and grow its value — off the back of indexation and fixed rent reviews — is solid,” says Mark.

He adds there are definite opportunities in this sector for active managers, due to mispricing. By looking at transaction evidence, Mark says you can see implied transaction yields and cap rates (a real estate metric calculating a property’s yearly rate of return based on its income, independent of financing) in the listed market showing discounts of anywhere upwards of 20-30 per cent.

“The value of high quality portfolios in resilient capital structures, like real estate, which are managed by exceptional teams, are becoming more prominent. So, in our view, whilst the sector is currently mispriced, it provides considerable opportunities for investors to include an allocation of Global REITs to their portfolio.”

Mark Mazzarella, CFA is Head of Real Estate Securities at Dexus.

He spoke on the topic ‘Mispriced in plain sight: The case for an allocation to Global REITs’ at the 2026 IMAP Portfolio Management Conference in Sydney.