Canadian REITs outperformed most global peers in 2025 and are positioned for continued relative strength in 2026, according to Hazelview’s 2026 global outlook released Tuesday.

Based on local currency terms, Canada’s 11.8% total return outperformed the 8.3% global benchmark in 2025 the country’s REITs were supported by easing monetary policy and improving real estate fundamentals after a volatile start to the year. Canada total return reflected strength in select asset classes and improving fundamentals late in the year.

Canadian REIT performance was led by seniors housing, where powerful demographic tailwinds and a severe lack of new supply drove sharp improvements in occupancy, rental rates and margins, said Hazelview. Construction starts in Canadian seniors housing remain near record lows, while the population aged 80 and older continues to expand rapidly, creating a persistent supply-demand imbalance. Hazelview expects occupancy to surpass pre-pandemic levels in 2026, supporting above-average earnings growth for Canadian seniors housing REITs.

Industrial and logistics assets also contributed to Canada’s relative strength. Hazelview noted that Canada’s industrial-construction pipeline remains modest compared with historical levels, helping limit oversupply pressures. While some tariff-related uncertainty weighed on tenant demand earlier in 2025, the firm expects fundamentals to improve in 2026 as supply continues to decline and leasing activity stabilizes.

By contrast, U.S. REITs were the weakest-performing major region in 2025. Hazelview attributed the American underperformance to a more restrictive U.S. monetary policy stance for much of the year, which kept interest rates higher for longer periods and triggered meaningful fund outflows from the sector. Residential assets and data centres weighed on U.S. performance despite solid long-term demand trends.

Looking ahead to 2026, Hazelview’s outlook for U.S. REITs has improved. The firm said falling new supply across residential and industrial assets, combined with historically low valuations, could support a rebound if interest rates continue to ease. Still, Hazelview expects Canada to remain comparatively well-positioned due to its sector mix and stronger near-term fundamentals.

Data centres were a notable laggard globally in 2025 following strong gains in prior years, particularly in the U.S. and Australia, where investor concerns around capital intensity and development risk pressured valuations. Hazelview said the pullback has improved the sector’s risk-reward profile heading into 2026. Demand driven by AI adoption and cloud computing remains strong, while power constraints and infrastructure bottlenecks are limiting new supply. The firm expects data centres in the U.S. and key Asian markets such as Singapore and Hong Kong to benefit from renewed pricing power and improving returns.

Performance across other regions varied widely. Japan and Hong Kong led global returns in 2025, supported by low vacancy rates, rising rents and improving investor sentiment. Singapore also outperformed, benefiting from strength in office, industrial and retail REITs, as well as structurally constrained data-centre supply.

Continental Europe modestly underperformed the global benchmark as weaker economic growth and a pause in European Central Bank interest-rate cuts weighed on sentiment. Germany and Sweden were among the weakest performers, while Spain and the Netherlands posted strong gains. The U.K. delivered above-average returns, led by retail and self-storage assets despite ongoing fiscal and inflation pressures.

Australia slightly trailed the global benchmark, dragged down by weakness in large data centre and logistics names, even as residential subsectors such as land lease communities performed well.

For 2026, Hazelview said the global REIT outlook is improving as new supply declines across most asset types, demand remains resilient and interest rates are expected to trend lower. The firm forecasts global REIT earnings growth of about 7.2% in 2026 and said valuation discounts relative to broader equities are among the widest seen in decades.

Hazelview concluded that Canadian REITs enter 2026 from a position of relative strength, supported by seniors housing, disciplined development across industrial and residential assets, and improving prospects for data centres, leaving them well placed to outperform many international counterparts as market conditions normalize.